Correlation Between ValOre Metals and Yellow Cake

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

Diversification Opportunities for ValOre Metals and Yellow Cake

0.4

Correlation Coefficient

ValOre Metals  Yellow Cake

Very weak diversification

The 3 months correlation between ValOre and Yellow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Yellow Cake plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Cake plc 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 Yellow Cake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Cake plc has no effect on the direction of ValOre Metals i.e., ValOre Metals and Yellow Cake go up and down completely randomly.

Pair Corralation between ValOre Metals and Yellow Cake

Assuming the 90 days horizon ValOre Metals Corp is expected to generate 2.32 times more return on investment than Yellow Cake. However, ValOre Metals is 2.32 times more volatile than Yellow Cake plc. It trades about 0.0 of its potential returns per unit of risk. Yellow Cake plc is currently generating about 0.0 per unit of risk. If you would invest  5.55  in ValOre Metals Corp on December 29, 2024 and sell it today you would lose (0.55) from holding ValOre Metals Corp or give up 9.91% of portfolio value over 90 days.

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

ValOre Metals Corp  vs.  Yellow Cake plc

ValOre Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ValOre Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ValOre Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Yellow Cake plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Cake plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yellow Cake is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ValOre Metals and Yellow Cake

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

The idea behind ValOre Metals Corp and Yellow Cake plc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.