Correlation Between TOMBADOR IRON and Aqua Metals

Can any of the company-specific risk be diversified away by investing in both TOMBADOR IRON and Aqua Metals 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 TOMBADOR IRON and Aqua Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOMBADOR IRON LTD and Aqua Metals, you can compare the effects of market volatilities on TOMBADOR IRON and Aqua Metals 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 TOMBADOR IRON with a short position of Aqua Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOMBADOR IRON and Aqua Metals.

Diversification Opportunities for TOMBADOR IRON and Aqua Metals

0.0

Correlation Coefficient

TOMBADOR IRON  Aqua Metals

Pay attention - limited upside

The 3 months correlation between TOMBADOR and Aqua is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TOMBADOR IRON LTD and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and TOMBADOR IRON 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 TOMBADOR IRON LTD are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of TOMBADOR IRON i.e., TOMBADOR IRON and Aqua Metals go up and down completely randomly.

Pair Corralation between TOMBADOR IRON and Aqua Metals

If you would invest  205.00  in Aqua Metals on October 10, 2024 and sell it today you would lose (1.00) from holding Aqua Metals or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

TOMBADOR IRON LTD  vs.  Aqua Metals

TOMBADOR IRON LTD

Risk-Adjusted Performance

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Very Weak

Over the last 90 days TOMBADOR IRON LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TOMBADOR IRON is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aqua Metals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Aqua Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Aqua Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TOMBADOR IRON and Aqua Metals

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

The idea behind TOMBADOR IRON LTD and Aqua 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.