Correlation Between Sayona Mining and Clime Investment

Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Clime Investment 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 Clime Investment 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 Clime Investment Management, you can compare the effects of market volatilities on Sayona Mining and Clime Investment 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 Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Clime Investment.

Diversification Opportunities for Sayona Mining and Clime Investment

0.38

Correlation Coefficient

Sayona Mining  Clime Investment

Weak diversification

The 3 months correlation between Sayona and Clime is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Sayona Mining i.e., Sayona Mining and Clime Investment go up and down completely randomly.

Pair Corralation between Sayona Mining and Clime Investment

Assuming the 90 days horizon Sayona Mining is expected to generate 2.35 times less return on investment than Clime Investment. But when comparing it to its historical volatility, Sayona Mining Limited is 4.34 times less risky than Clime Investment. It trades about 0.04 of its potential returns per unit of risk. Clime Investment Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Clime Investment Management on September 16, 2024 and sell it today you would lose (0.09) from holding Clime Investment Management or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Sayona Mining Limited  vs.  Clime Investment Management

Sayona Mining Limited

Risk-Adjusted Performance

3 of 100

Weak

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

Clime Investment Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clime Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sayona Mining and Clime Investment

The main advantage of trading using opposite Sayona Mining and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining position performs unexpectedly, Clime Investment 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 Clime Investment will offset losses from the drop in Clime Investment's long position.

The idea behind Sayona Mining Limited and Clime Investment Management 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.