Correlation Between ValOre Metals and Baselode Energy

Can any of the company-specific risk be diversified away by investing in both ValOre Metals and Baselode 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 Baselode 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 Baselode Energy Corp, you can compare the effects of market volatilities on ValOre Metals and Baselode 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 Baselode Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ValOre Metals and Baselode Energy.

Diversification Opportunities for ValOre Metals and Baselode Energy

-0.1

Correlation Coefficient

ValOre Metals  Baselode Energy

Good diversification

The 3 months correlation between ValOre and Baselode is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Baselode Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baselode 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 Baselode Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baselode Energy Corp has no effect on the direction of ValOre Metals i.e., ValOre Metals and Baselode Energy go up and down completely randomly.

Pair Corralation between ValOre Metals and Baselode Energy

Assuming the 90 days horizon ValOre Metals Corp is expected to generate 1.35 times more return on investment than Baselode Energy. However, ValOre Metals is 1.35 times more volatile than Baselode Energy Corp. It trades about 0.1 of its potential returns per unit of risk. Baselode Energy Corp is currently generating about -0.07 per unit of risk. If you would invest  4.01  in ValOre Metals Corp on September 3, 2024 and sell it today you would earn a total of  1.49  from holding ValOre Metals Corp or generate 37.16% return on investment over 90 days.

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

ValOre Metals Corp  vs.  Baselode Energy Corp

ValOre Metals Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, ValOre Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ValOre Metals and Baselode Energy

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

The idea behind ValOre Metals Corp and Baselode 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..