Correlation Between C3 Metals and Eddy Smart

Can any of the company-specific risk be diversified away by investing in both C3 Metals and Eddy Smart 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 C3 Metals and Eddy Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C3 Metals and Eddy Smart Home, you can compare the effects of market volatilities on C3 Metals and Eddy Smart 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 C3 Metals with a short position of Eddy Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of C3 Metals and Eddy Smart.

Diversification Opportunities for C3 Metals and Eddy Smart

0.74

Correlation Coefficient

C3 Metals  Eddy Smart

Poor diversification

The 3 months correlation between CCCM and Eddy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding C3 Metals and Eddy Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eddy Smart Home and C3 Metals 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 C3 Metals are associated (or correlated) with Eddy Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eddy Smart Home has no effect on the direction of C3 Metals i.e., C3 Metals and Eddy Smart go up and down completely randomly.

Pair Corralation between C3 Metals and Eddy Smart

Assuming the 90 days trading horizon C3 Metals is expected to generate 1.04 times more return on investment than Eddy Smart. However, C3 Metals is 1.04 times more volatile than Eddy Smart Home. It trades about -0.11 of its potential returns per unit of risk. Eddy Smart Home is currently generating about -0.21 per unit of risk. If you would invest  32.00  in C3 Metals on September 12, 2024 and sell it today you would lose (8.00) from holding C3 Metals or give up 25.0% of portfolio value over 90 days.

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

C3 Metals  vs.  Eddy Smart Home

C3 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C3 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Eddy Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eddy Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with C3 Metals and Eddy Smart

The main advantage of trading using opposite C3 Metals and Eddy Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C3 Metals position performs unexpectedly, Eddy Smart 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 Eddy Smart will offset losses from the drop in Eddy Smart's long position.

The idea behind C3 Metals and Eddy Smart Home 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .