Correlation Between Cymbria and Namibia Critical

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

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

Diversification Opportunities for Cymbria and Namibia Critical

-0.46

Correlation Coefficient

Cymbria  Namibia Critical

Very good diversification

The 3 months correlation between Cymbria and Namibia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria and Namibia Critical Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namibia Critical Metals and Cymbria 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 Cymbria are associated (or correlated) with Namibia Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namibia Critical Metals has no effect on the direction of Cymbria i.e., Cymbria and Namibia Critical go up and down completely randomly.

Pair Corralation between Cymbria and Namibia Critical

Assuming the 90 days trading horizon Cymbria is expected to generate 7.15 times less return on investment than Namibia Critical. But when comparing it to its historical volatility, Cymbria is 8.58 times less risky than Namibia Critical. It trades about 0.03 of its potential returns per unit of risk. Namibia Critical Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Namibia Critical Metals on October 8, 2024 and sell it today you would lose (0.50) from holding Namibia Critical Metals or give up 12.5% of portfolio value over 90 days.

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

Cymbria  vs.  Namibia Critical Metals

Cymbria

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cymbria are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Cymbria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Namibia Critical Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Namibia Critical Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Namibia Critical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cymbria and Namibia Critical

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

The idea behind Cymbria and Namibia Critical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.