Correlation Between ValOre Metals and Appia Energy

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

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

Diversification Opportunities for ValOre Metals and Appia Energy

0.5

Correlation Coefficient

ValOre Metals  Appia Energy

Very weak diversification

The 3 months correlation between ValOre and Appia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Appia Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appia Energy Corp and ValOre Metals 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 ValOre Metals Corp are associated (or correlated) with Appia Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appia Energy Corp has no effect on the direction of ValOre Metals i.e., ValOre Metals and Appia Energy go up and down completely randomly.

Pair Corralation between ValOre Metals and Appia Energy

Assuming the 90 days horizon ValOre Metals Corp is expected to generate 1.06 times more return on investment than Appia Energy. However, ValOre Metals is 1.06 times more volatile than Appia Energy Corp. It trades about 0.12 of its potential returns per unit of risk. Appia Energy Corp is currently generating about 0.08 per unit of risk. If you would invest  3.80  in ValOre Metals Corp on September 12, 2024 and sell it today you would earn a total of  2.20  from holding ValOre Metals Corp or generate 57.89% return on investment over 90 days.

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

ValOre Metals Corp  vs.  Appia Energy Corp

ValOre Metals Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ValOre Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Appia Energy Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appia Energy Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Appia Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ValOre Metals and Appia Energy

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

The idea behind ValOre Metals Corp and Appia Energy Corp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.