Correlation Between Largo Resources and Materion

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

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

Diversification Opportunities for Largo Resources and Materion

0.1

Correlation Coefficient

Largo Resources  Materion

Average diversification

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

Pair Corralation between Largo Resources and Materion

Considering the 90-day investment horizon Largo Resources is expected to generate 1.83 times more return on investment than Materion. However, Largo Resources is 1.83 times more volatile than Materion. It trades about 0.03 of its potential returns per unit of risk. Materion is currently generating about -0.1 per unit of risk. If you would invest  173.00  in Largo Resources on December 28, 2024 and sell it today you would earn a total of  5.00  from holding Largo Resources or generate 2.89% return on investment over 90 days.

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

Largo Resources  vs.  Materion

Largo Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Largo Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Largo Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Materion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Largo Resources and Materion

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

The idea behind Largo Resources and Materion 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.