Correlation Between Chalice Mining and Red Hill

Can any of the company-specific risk be diversified away by investing in both Chalice Mining and Red Hill 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 Red Hill 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 Red Hill Iron, you can compare the effects of market volatilities on Chalice Mining and Red Hill 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 Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chalice Mining and Red Hill.

Diversification Opportunities for Chalice Mining and Red Hill

-0.34

Correlation Coefficient

Chalice Mining  Red Hill

Very good diversification

The 3 months correlation between Chalice and Red is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron 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 Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Chalice Mining i.e., Chalice Mining and Red Hill go up and down completely randomly.

Pair Corralation between Chalice Mining and Red Hill

Assuming the 90 days trading horizon Chalice Mining Limited is expected to under-perform the Red Hill. In addition to that, Chalice Mining is 1.66 times more volatile than Red Hill Iron. It trades about -0.05 of its total potential returns per unit of risk. Red Hill Iron is currently generating about 0.19 per unit of volatility. If you would invest  310.00  in Red Hill Iron on September 21, 2024 and sell it today you would earn a total of  102.00  from holding Red Hill Iron or generate 32.9% return on investment over 90 days.

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

Chalice Mining Limited  vs.  Red Hill Iron

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Red Hill Iron

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Red Hill Iron are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Red Hill unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chalice Mining and Red Hill

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

The idea behind Chalice Mining Limited and Red Hill Iron 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.