Correlation Between Black Rock and Cyclone Metals

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Can any of the company-specific risk be diversified away by investing in both Black Rock and Cyclone 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 Black Rock and Cyclone Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Cyclone Metals Limited, you can compare the effects of market volatilities on Black Rock and Cyclone 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 Black Rock with a short position of Cyclone Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Cyclone Metals.

Diversification Opportunities for Black Rock and Cyclone Metals

BlackCycloneDiversified AwayBlackCycloneDiversified Away100%
-0.7
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Black Rock and Cyclone Metals

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Cyclone Metals. But the stock apears to be less risky and, when comparing its historical volatility, Black Rock Mining is 2.62 times less risky than Cyclone Metals. The stock trades about -0.13 of its potential returns per unit of risk. The Cyclone Metals Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Cyclone Metals Limited on October 9, 2024 and sell it today you would earn a total of  3.70  from holding Cyclone Metals Limited or generate 185.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Black Rock Mining  vs.  Cyclone Metals Limited

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50050100
JavaScript chart by amCharts 3.21.15BKT CLE
       Timeline  
Black Rock Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.0350.040.0450.050.055
Cyclone Metals 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cyclone Metals Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Cyclone Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.020.0250.030.0350.040.0450.050.0550.06

Black Rock and Cyclone Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.22-5.41-3.59-1.780.01.573.134.726.327.91 0.0050.0100.0150.020
JavaScript chart by amCharts 3.21.15BKT CLE
       Returns  

Pair Trading with Black Rock and Cyclone Metals

The main advantage of trading using opposite Black Rock and Cyclone Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Cyclone 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 Cyclone Metals will offset losses from the drop in Cyclone Metals' long position.
The idea behind Black Rock Mining and Cyclone Metals Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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