Correlation Between Tinka Resources and Neo Battery

Can any of the company-specific risk be diversified away by investing in both Tinka Resources and Neo Battery 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 Tinka Resources and Neo Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tinka Resources Limited and Neo Battery Materials, you can compare the effects of market volatilities on Tinka Resources and Neo Battery 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 Tinka Resources with a short position of Neo Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and Neo Battery.

Diversification Opportunities for Tinka Resources and Neo Battery

-0.7

Correlation Coefficient

Tinka Resources  Neo Battery

Excellent diversification

The 3 months correlation between Tinka and Neo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tinka Resources Limited and Neo Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Battery Materials and Tinka Resources 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 Tinka Resources Limited are associated (or correlated) with Neo Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Battery Materials has no effect on the direction of Tinka Resources i.e., Tinka Resources and Neo Battery go up and down completely randomly.

Pair Corralation between Tinka Resources and Neo Battery

Assuming the 90 days horizon Tinka Resources Limited is expected to under-perform the Neo Battery. But the otc stock apears to be less risky and, when comparing its historical volatility, Tinka Resources Limited is 5.81 times less risky than Neo Battery. The otc stock trades about -0.03 of its potential returns per unit of risk. The Neo Battery Materials is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9.50  in Neo Battery Materials on September 5, 2024 and sell it today you would earn a total of  45.50  from holding Neo Battery Materials or generate 478.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Tinka Resources Limited  vs.  Neo Battery Materials

Tinka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Neo Battery Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Battery Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Neo Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tinka Resources and Neo Battery

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

The idea behind Tinka Resources Limited and Neo Battery Materials 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.