Correlation Between IGO and Clime Investment

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

By analyzing existing cross correlation between IGO Limited and Clime Investment Management, you can compare the effects of market volatilities on IGO and Clime Investment 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 Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Clime Investment.

Diversification Opportunities for IGO and Clime Investment

-0.41

Correlation Coefficient

IGO  Clime Investment

Very good diversification

The 3 months correlation between IGO and Clime is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of IGO i.e., IGO and Clime Investment go up and down completely randomly.

Pair Corralation between IGO and Clime Investment

Assuming the 90 days horizon IGO Limited is expected to under-perform the Clime Investment. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 4.71 times less risky than Clime Investment. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Clime Investment Management is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.16  in Clime Investment Management on September 14, 2024 and sell it today you would lose (1.15) from holding Clime Investment Management or give up 99.14% of portfolio value over 90 days.

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

IGO Limited  vs.  Clime Investment Management

IGO Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, IGO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clime Investment Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clime Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Clime Investment

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

The idea behind IGO Limited and Clime Investment Management 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.