Correlation Between Energy Technologies and Chalice Mining

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

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

Diversification Opportunities for Energy Technologies and Chalice Mining

-0.35

Correlation Coefficient

Energy Technologies  Chalice Mining

Very good diversification

The 3 months correlation between Energy and Chalice is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and Energy Technologies 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 Energy Technologies Limited 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 Energy Technologies i.e., Energy Technologies and Chalice Mining go up and down completely randomly.

Pair Corralation between Energy Technologies and Chalice Mining

Assuming the 90 days trading horizon Energy Technologies Limited is expected to generate 0.67 times more return on investment than Chalice Mining. However, Energy Technologies Limited is 1.5 times less risky than Chalice Mining. It trades about 0.03 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about 0.01 per unit of risk. If you would invest  3.10  in Energy Technologies Limited on December 2, 2024 and sell it today you would earn a total of  0.10  from holding Energy Technologies Limited or generate 3.23% return on investment over 90 days.

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

Energy Technologies Limited  vs.  Chalice Mining Limited

Energy Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Technologies Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Energy Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Chalice Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chalice Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Energy Technologies and Chalice Mining

The main advantage of trading using opposite Energy Technologies and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies 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 Energy Technologies Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.