Correlation Between Chibougamau Independent and Aston Bay

Can any of the company-specific risk be diversified away by investing in both Chibougamau Independent and Aston Bay 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 Chibougamau Independent and Aston Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chibougamau Independent Mines and Aston Bay Holdings, you can compare the effects of market volatilities on Chibougamau Independent and Aston Bay 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 Chibougamau Independent with a short position of Aston Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chibougamau Independent and Aston Bay.

Diversification Opportunities for Chibougamau Independent and Aston Bay

-0.48

Correlation Coefficient

Chibougamau Independent  Aston Bay

Very good diversification

The 3 months correlation between Chibougamau and Aston is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chibougamau Independent Mines and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings and Chibougamau Independent 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 Chibougamau Independent Mines are associated (or correlated) with Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Chibougamau Independent i.e., Chibougamau Independent and Aston Bay go up and down completely randomly.

Pair Corralation between Chibougamau Independent and Aston Bay

Assuming the 90 days horizon Chibougamau Independent Mines is expected to generate 0.85 times more return on investment than Aston Bay. However, Chibougamau Independent Mines is 1.17 times less risky than Aston Bay. It trades about 0.12 of its potential returns per unit of risk. Aston Bay Holdings is currently generating about 0.01 per unit of risk. If you would invest  14.00  in Chibougamau Independent Mines on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Chibougamau Independent Mines or generate 35.71% return on investment over 90 days.

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

Chibougamau Independent Mines  vs.  Aston Bay Holdings

Chibougamau Independent

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.

Aston Bay Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Bay Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aston Bay is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chibougamau Independent and Aston Bay

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

The idea behind Chibougamau Independent Mines and Aston Bay Holdings 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.