Correlation Between Chrysalis Investments and Power Metal

Can any of the company-specific risk be diversified away by investing in both Chrysalis Investments and Power Metal 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 Chrysalis Investments and Power Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chrysalis Investments and Power Metal Resources, you can compare the effects of market volatilities on Chrysalis Investments and Power Metal 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 Chrysalis Investments with a short position of Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chrysalis Investments and Power Metal.

Diversification Opportunities for Chrysalis Investments and Power Metal

0.25

Correlation Coefficient

Chrysalis Investments  Power Metal

Modest diversification

The 3 months correlation between Chrysalis and Power is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chrysalis Investments and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources and Chrysalis Investments 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 Chrysalis Investments are associated (or correlated) with Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Chrysalis Investments i.e., Chrysalis Investments and Power Metal go up and down completely randomly.

Pair Corralation between Chrysalis Investments and Power Metal

Assuming the 90 days trading horizon Chrysalis Investments is expected to generate 1.03 times more return on investment than Power Metal. However, Chrysalis Investments is 1.03 times more volatile than Power Metal Resources. It trades about 0.03 of its potential returns per unit of risk. Power Metal Resources is currently generating about -0.01 per unit of risk. If you would invest  8,080  in Chrysalis Investments on October 26, 2024 and sell it today you would earn a total of  1,380  from holding Chrysalis Investments or generate 17.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Chrysalis Investments  vs.  Power Metal Resources

Chrysalis Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chrysalis Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chrysalis Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Power Metal Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metal Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Power Metal is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chrysalis Investments and Power Metal

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

The idea behind Chrysalis Investments and Power Metal Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..