Correlation Between Critical Elements and Artemis Resources

Can any of the company-specific risk be diversified away by investing in both Critical Elements and Artemis Resources 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 Critical Elements and Artemis Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Critical Elements and Artemis Resources

0.45

Correlation Coefficient

Critical Elements  Artemis Resources

Very weak diversification

The 3 months correlation between Critical and Artemis is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and Artemis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemis Resources and Critical Elements 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 Critical Elements are associated (or correlated) with Artemis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemis Resources has no effect on the direction of Critical Elements i.e., Critical Elements and Artemis Resources go up and down completely randomly.

Pair Corralation between Critical Elements and Artemis Resources

Assuming the 90 days horizon Critical Elements is expected to generate 32.41 times less return on investment than Artemis Resources. But when comparing it to its historical volatility, Critical Elements is 17.97 times less risky than Artemis Resources. It trades about 0.11 of its potential returns per unit of risk. Artemis Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Artemis Resources on December 22, 2024 and sell it today you would earn a total of  0.82  from holding Artemis Resources or generate 164.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Critical Elements  vs.  Artemis Resources

Critical Elements

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Elements are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Critical Elements reported solid returns over the last few months and may actually be approaching a breakup point.

Artemis Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Resources are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Artemis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Elements and Artemis Resources

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

The idea behind Critical Elements and Artemis 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.

Check out your portfolio center.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.