Correlation Between Glencore PLC and Critical Elements

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

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

Diversification Opportunities for Glencore PLC and Critical Elements

0.65

Correlation Coefficient

Glencore PLC  Critical Elements

Poor diversification

The 3 months correlation between Glencore and Critical is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements and Glencore PLC 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 Glencore PLC are associated (or correlated) with Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of Glencore PLC i.e., Glencore PLC and Critical Elements go up and down completely randomly.

Pair Corralation between Glencore PLC and Critical Elements

Assuming the 90 days horizon Glencore PLC is expected to under-perform the Critical Elements. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC is 2.48 times less risky than Critical Elements. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Critical Elements is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Critical Elements on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Critical Elements or generate 3.57% return on investment over 90 days.

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

Glencore PLC  vs.  Critical Elements

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Glencore PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Critical Elements

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Glencore PLC and Critical Elements

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

The idea behind Glencore PLC and Critical Elements 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.