Correlation Between Cobalt Blue and Metals X

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

By analyzing existing cross correlation between Cobalt Blue Holdings and Metals X Limited, you can compare the effects of market volatilities on Cobalt Blue and Metals X 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 Cobalt Blue with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Blue and Metals X.

Diversification Opportunities for Cobalt Blue and Metals X

-0.17

Correlation Coefficient

Cobalt Blue  Metals X

Good diversification

The 3 months correlation between Cobalt and Metals is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Blue Holdings and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and Cobalt Blue 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 Cobalt Blue Holdings are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Cobalt Blue i.e., Cobalt Blue and Metals X go up and down completely randomly.

Pair Corralation between Cobalt Blue and Metals X

Assuming the 90 days horizon Cobalt Blue is expected to generate 1.68 times less return on investment than Metals X. In addition to that, Cobalt Blue is 1.71 times more volatile than Metals X Limited. It trades about 0.06 of its total potential returns per unit of risk. Metals X Limited is currently generating about 0.16 per unit of volatility. If you would invest  23.00  in Metals X Limited on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Metals X Limited or generate 78.26% return on investment over 90 days.

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

Cobalt Blue Holdings  vs.  Metals X Limited

Cobalt Blue Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cobalt Blue Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Cobalt Blue reported solid returns over the last few months and may actually be approaching a breakup point.

Metals X Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cobalt Blue and Metals X

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

The idea behind Cobalt Blue Holdings and Metals X 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.