Correlation Between Neo Battery and Kiplin Metals

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

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

Diversification Opportunities for Neo Battery and Kiplin Metals

0.3

Correlation Coefficient

Neo Battery  Kiplin Metals

Weak diversification

The 3 months correlation between Neo and Kiplin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals and Neo Battery 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 Neo Battery Materials are associated (or correlated) with Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Neo Battery i.e., Neo Battery and Kiplin Metals go up and down completely randomly.

Pair Corralation between Neo Battery and Kiplin Metals

Assuming the 90 days horizon Neo Battery is expected to generate 15.85 times less return on investment than Kiplin Metals. But when comparing it to its historical volatility, Neo Battery Materials is 1.98 times less risky than Kiplin Metals. It trades about 0.01 of its potential returns per unit of risk. Kiplin Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Kiplin Metals on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Kiplin Metals or generate 34.78% return on investment over 90 days.

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

Neo Battery Materials  vs.  Kiplin Metals

Neo Battery Materials

Risk-Adjusted Performance

Weak

Over the last 90 days Neo Battery Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Neo Battery is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kiplin Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kiplin Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kiplin Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neo Battery and Kiplin Metals

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

The idea behind Neo Battery Materials and Kiplin Metals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.