Correlation Between Sayona Mining and Teck Resources

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

Diversification Opportunities for Sayona Mining and Teck Resources

0.45

Correlation Coefficient

Sayona Mining  Teck Resources

Very weak diversification

The 3 months correlation between Sayona and Teck is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Sayona Mining i.e., Sayona Mining and Teck Resources go up and down completely randomly.

Pair Corralation between Sayona Mining and Teck Resources

Assuming the 90 days horizon Sayona Mining Limited is expected to under-perform the Teck Resources. In addition to that, Sayona Mining is 2.98 times more volatile than Teck Resources Ltd. It trades about -0.03 of its total potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.02 per unit of volatility. If you would invest  4,477  in Teck Resources Ltd on August 31, 2024 and sell it today you would earn a total of  147.00  from holding Teck Resources Ltd or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sayona Mining Limited  vs.  Teck Resources Ltd

Sayona Mining Limited

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sayona Mining Limited are ranked lower than 6 (%) 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.

Teck Resources

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teck Resources Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Teck Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sayona Mining and Teck Resources

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

The idea behind Sayona Mining Limited and Teck Resources Ltd 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.