Correlation Between SPACE and Syrah Resources

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

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

Diversification Opportunities for SPACE and Syrah Resources

-0.3

Correlation Coefficient

SPACE  Syrah Resources

Very good diversification

The 3 months correlation between SPACE and Syrah is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Syrah Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrah Resources and SPACE 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 SPACE are associated (or correlated) with Syrah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrah Resources has no effect on the direction of SPACE i.e., SPACE and Syrah Resources go up and down completely randomly.

Pair Corralation between SPACE and Syrah Resources

Assuming the 90 days horizon SPACE is expected to under-perform the Syrah Resources. But the crypto coin apears to be less risky and, when comparing its historical volatility, SPACE is 1.41 times less risky than Syrah Resources. The crypto coin trades about -0.18 of its potential returns per unit of risk. The Syrah Resources Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Syrah Resources Limited on October 5, 2024 and sell it today you would lose (3.00) from holding Syrah Resources Limited or give up 17.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

SPACE  vs.  Syrah Resources Limited

SPACE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Syrah Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syrah Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 SPACE and Syrah Resources

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

The idea behind SPACE and Syrah Resources 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.