Correlation Between Almonty Industries and Champion Bear

Can any of the company-specific risk be diversified away by investing in both Almonty Industries and Champion Bear 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 Almonty Industries and Champion Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Almonty Industries and Champion Bear Resources, you can compare the effects of market volatilities on Almonty Industries and Champion Bear 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 Almonty Industries with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almonty Industries and Champion Bear.

Diversification Opportunities for Almonty Industries and Champion Bear

-0.7

Correlation Coefficient

Almonty Industries  Champion Bear

Excellent diversification

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

Pair Corralation between Almonty Industries and Champion Bear

Assuming the 90 days horizon Almonty Industries is expected to generate 2.39 times less return on investment than Champion Bear. But when comparing it to its historical volatility, Almonty Industries is 5.57 times less risky than Champion Bear. It trades about 0.39 of its potential returns per unit of risk. Champion Bear Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Champion Bear Resources on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Champion Bear Resources or generate 0.0% return on investment over 90 days.

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

Almonty Industries  vs.  Champion Bear Resources

Almonty Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Almonty Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Almonty Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Champion Bear Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Champion Bear reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Almonty Industries and Champion Bear

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

The idea behind Almonty Industries and Champion Bear Resources 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.