Correlation Between Cameco Corp and Royalty Management

Can any of the company-specific risk be diversified away by investing in both Cameco Corp and Royalty Management 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 Cameco Corp and Royalty Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cameco Corp and Royalty Management Holding, you can compare the effects of market volatilities on Cameco Corp and Royalty Management 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 Cameco Corp with a short position of Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameco Corp and Royalty Management.

Diversification Opportunities for Cameco Corp and Royalty Management

0.27

Correlation Coefficient

Cameco Corp  Royalty Management

Modest diversification

The 3 months correlation between Cameco and Royalty is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cameco Corp and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management and Cameco Corp 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 Cameco Corp are associated (or correlated) with Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Cameco Corp i.e., Cameco Corp and Royalty Management go up and down completely randomly.

Pair Corralation between Cameco Corp and Royalty Management

Considering the 90-day investment horizon Cameco Corp is expected to under-perform the Royalty Management. But the stock apears to be less risky and, when comparing its historical volatility, Cameco Corp is 1.02 times less risky than Royalty Management. The stock trades about -0.06 of its potential returns per unit of risk. The Royalty Management Holding is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Royalty Management Holding on December 20, 2024 and sell it today you would lose (14.00) from holding Royalty Management Holding or give up 11.86% of portfolio value over 90 days.

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

Cameco Corp  vs.  Royalty Management Holding

Cameco Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cameco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Royalty Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royalty Management Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cameco Corp and Royalty Management

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

The idea behind Cameco Corp and Royalty Management Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.