Correlation Between Edison Cobalt and Bushveld Minerals

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

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

Diversification Opportunities for Edison Cobalt and Bushveld Minerals

-0.56

Correlation Coefficient

Edison Cobalt  Bushveld Minerals

Excellent diversification

The 3 months correlation between Edison and Bushveld is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp and Bushveld Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bushveld Minerals and Edison Cobalt 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 Edison Cobalt Corp are associated (or correlated) with Bushveld Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bushveld Minerals has no effect on the direction of Edison Cobalt i.e., Edison Cobalt and Bushveld Minerals go up and down completely randomly.

Pair Corralation between Edison Cobalt and Bushveld Minerals

Assuming the 90 days horizon Edison Cobalt is expected to generate 286.1 times less return on investment than Bushveld Minerals. But when comparing it to its historical volatility, Edison Cobalt Corp is 35.92 times less risky than Bushveld Minerals. It trades about 0.03 of its potential returns per unit of risk. Bushveld Minerals Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Bushveld Minerals Limited on December 30, 2024 and sell it today you would earn a total of  0.36  from holding Bushveld Minerals Limited or generate 900.0% return on investment over 90 days.

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

Edison Cobalt Corp  vs.  Bushveld Minerals Limited

Edison Cobalt Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edison Cobalt Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Edison Cobalt may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bushveld Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bushveld Minerals Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bushveld Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edison Cobalt and Bushveld Minerals

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

The idea behind Edison Cobalt Corp and Bushveld Minerals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.