Correlation Between Cymbria and Talon Metals

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

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

Diversification Opportunities for Cymbria and Talon Metals

-0.43

Correlation Coefficient

Cymbria  Talon Metals

Very good diversification

The 3 months correlation between Cymbria and Talon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria and Talon Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon Metals Corp 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 Talon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Metals Corp has no effect on the direction of Cymbria i.e., Cymbria and Talon Metals go up and down completely randomly.

Pair Corralation between Cymbria and Talon Metals

Assuming the 90 days trading horizon Cymbria is expected to generate 0.27 times more return on investment than Talon Metals. However, Cymbria is 3.75 times less risky than Talon Metals. It trades about 0.03 of its potential returns per unit of risk. Talon Metals Corp is currently generating about -0.03 per unit of risk. If you would invest  7,231  in Cymbria on October 7, 2024 and sell it today you would earn a total of  104.00  from holding Cymbria or generate 1.44% return on investment over 90 days.

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

Cymbria  vs.  Talon Metals Corp

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.

Talon Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cymbria and Talon Metals

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

The idea behind Cymbria and Talon Metals Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.