Correlation Between IGO and Cobalt Blue

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

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

Diversification Opportunities for IGO and Cobalt Blue

-0.11

Correlation Coefficient

IGO  Cobalt Blue

Good diversification

The 3 months correlation between IGO and Cobalt is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Cobalt Blue Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Blue Holdings and IGO 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 IGO Limited are associated (or correlated) with Cobalt Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Blue Holdings has no effect on the direction of IGO i.e., IGO and Cobalt Blue go up and down completely randomly.

Pair Corralation between IGO and Cobalt Blue

Assuming the 90 days horizon IGO Limited is expected to under-perform the Cobalt Blue. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 5.01 times less risky than Cobalt Blue. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Cobalt Blue Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.40  in Cobalt Blue Holdings on December 28, 2024 and sell it today you would earn a total of  0.06  from holding Cobalt Blue Holdings or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

IGO Limited  vs.  Cobalt Blue Holdings

IGO Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days IGO Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cobalt Blue Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cobalt Blue Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Cobalt Blue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Cobalt Blue

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

The idea behind IGO Limited and Cobalt Blue Holdings 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.