Correlation Between Clime Investment and FireFly Metals

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

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

Diversification Opportunities for Clime Investment and FireFly Metals

-0.04

Correlation Coefficient

Clime Investment  FireFly Metals

Good diversification

The 3 months correlation between Clime and FireFly is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals and Clime Investment 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 Clime Investment Management are associated (or correlated) with FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of Clime Investment i.e., Clime Investment and FireFly Metals go up and down completely randomly.

Pair Corralation between Clime Investment and FireFly Metals

Assuming the 90 days trading horizon Clime Investment Management is expected to under-perform the FireFly Metals. But the stock apears to be less risky and, when comparing its historical volatility, Clime Investment Management is 1.54 times less risky than FireFly Metals. The stock trades about -0.03 of its potential returns per unit of risk. The FireFly Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  93.00  in FireFly Metals on December 21, 2024 and sell it today you would earn a total of  15.00  from holding FireFly Metals or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Clime Investment Management  vs.  FireFly Metals

Clime Investment Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clime Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Clime Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FireFly Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FireFly Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, FireFly Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clime Investment and FireFly Metals

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

The idea behind Clime Investment Management and FireFly Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..