Correlation Between Snow Lake and Boliden AB

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

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

Diversification Opportunities for Snow Lake and Boliden AB

-0.74

Correlation Coefficient

Snow Lake  Boliden AB

Pay attention - limited upside

The 3 months correlation between Snow and Boliden is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snow Lake Resources and Boliden AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB ADR and Snow Lake 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 Snow Lake Resources are associated (or correlated) with Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB ADR has no effect on the direction of Snow Lake i.e., Snow Lake and Boliden AB go up and down completely randomly.

Pair Corralation between Snow Lake and Boliden AB

Given the investment horizon of 90 days Snow Lake Resources is expected to under-perform the Boliden AB. In addition to that, Snow Lake is 4.67 times more volatile than Boliden AB ADR. It trades about -0.03 of its total potential returns per unit of risk. Boliden AB ADR is currently generating about 0.15 per unit of volatility. If you would invest  5,657  in Boliden AB ADR on December 28, 2024 and sell it today you would earn a total of  1,169  from holding Boliden AB ADR or generate 20.66% return on investment over 90 days.

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

Snow Lake Resources  vs.  Boliden AB ADR

Snow Lake Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snow Lake Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Boliden AB ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Boliden AB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snow Lake and Boliden AB

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

The idea behind Snow Lake Resources and Boliden AB ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.