Correlation Between DATA MODUL and Chalice Mining

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

By analyzing existing cross correlation between DATA MODUL and Chalice Mining Limited, you can compare the effects of market volatilities on DATA MODUL and Chalice Mining 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 DATA MODUL with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA MODUL and Chalice Mining.

Diversification Opportunities for DATA MODUL and Chalice Mining

0.17

Correlation Coefficient

DATA MODUL  Chalice Mining

Average diversification

The 3 months correlation between DATA and Chalice is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and DATA MODUL 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 DATA MODUL are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of DATA MODUL i.e., DATA MODUL and Chalice Mining go up and down completely randomly.

Pair Corralation between DATA MODUL and Chalice Mining

Assuming the 90 days trading horizon DATA MODUL is expected to generate 0.66 times more return on investment than Chalice Mining. However, DATA MODUL is 1.52 times less risky than Chalice Mining. It trades about 0.07 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.13 per unit of risk. If you would invest  2,500  in DATA MODUL on October 8, 2024 and sell it today you would earn a total of  220.00  from holding DATA MODUL or generate 8.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DATA MODUL   vs.  Chalice Mining Limited

DATA MODUL

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DATA MODUL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, DATA MODUL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DATA MODUL and Chalice Mining

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

The idea behind DATA MODUL and Chalice Mining Limited 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.