Correlation Between Chalice Mining and Columbia Sportswear

Can any of the company-specific risk be diversified away by investing in both Chalice Mining and Columbia Sportswear 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 Chalice Mining and Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chalice Mining Limited and Columbia Sportswear, you can compare the effects of market volatilities on Chalice Mining and Columbia Sportswear 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 Chalice Mining with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chalice Mining and Columbia Sportswear.

Diversification Opportunities for Chalice Mining and Columbia Sportswear

-0.73

Correlation Coefficient

Chalice Mining  Columbia Sportswear

Pay attention - limited upside

The 3 months correlation between Chalice and Columbia is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and Chalice 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 Chalice Mining Limited are associated (or correlated) with Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Chalice Mining i.e., Chalice Mining and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Chalice Mining and Columbia Sportswear

Assuming the 90 days horizon Chalice Mining Limited is expected to under-perform the Columbia Sportswear. In addition to that, Chalice Mining is 2.15 times more volatile than Columbia Sportswear. It trades about -0.33 of its total potential returns per unit of risk. Columbia Sportswear is currently generating about 0.19 per unit of volatility. If you would invest  7,900  in Columbia Sportswear on September 24, 2024 and sell it today you would earn a total of  500.00  from holding Columbia Sportswear or generate 6.33% return on investment over 90 days.

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

Chalice Mining Limited  vs.  Columbia Sportswear

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Columbia Sportswear

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Columbia Sportswear reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chalice Mining and Columbia Sportswear

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

The idea behind Chalice Mining Limited and Columbia Sportswear 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.