Correlation Between Sayona Mining and Global Energy

Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Global Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sayona Mining and Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sayona Mining Limited and Global Energy Metals, you can compare the effects of market volatilities on Sayona Mining and Global Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sayona Mining with a short position of Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Global Energy.

Diversification Opportunities for Sayona Mining and Global Energy

-0.25

Correlation Coefficient

Sayona Mining  Global Energy

Very good diversification

The 3 months correlation between Sayona and Global is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals and Sayona Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sayona Mining Limited are associated (or correlated) with Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Sayona Mining i.e., Sayona Mining and Global Energy go up and down completely randomly.

Pair Corralation between Sayona Mining and Global Energy

Assuming the 90 days horizon Sayona Mining Limited is expected to under-perform the Global Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Sayona Mining Limited is 1.41 times less risky than Global Energy. The otc stock trades about -0.03 of its potential returns per unit of risk. The Global Energy Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.42  in Global Energy Metals on September 26, 2024 and sell it today you would lose (0.02) from holding Global Energy Metals or give up 1.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sayona Mining Limited  vs.  Global Energy Metals

Sayona Mining Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sayona Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Global Energy Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Energy Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Global Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sayona Mining and Global Energy

The main advantage of trading using opposite Sayona Mining and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining position performs unexpectedly, Global Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Energy will offset losses from the drop in Global Energy's long position.

The idea behind Sayona Mining Limited and Global Energy Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.