Correlation Between Neo Battery and Freegold Ventures

Can any of the company-specific risk be diversified away by investing in both Neo Battery and Freegold Ventures 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 Freegold Ventures 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 Freegold Ventures Limited, you can compare the effects of market volatilities on Neo Battery and Freegold Ventures 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 Freegold Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Battery and Freegold Ventures.

Diversification Opportunities for Neo Battery and Freegold Ventures

0.17

Correlation Coefficient

Neo Battery  Freegold Ventures

Average diversification

The 3 months correlation between Neo and Freegold is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures 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 Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Neo Battery i.e., Neo Battery and Freegold Ventures go up and down completely randomly.

Pair Corralation between Neo Battery and Freegold Ventures

Assuming the 90 days horizon Neo Battery Materials is expected to generate 10.0 times more return on investment than Freegold Ventures. However, Neo Battery is 10.0 times more volatile than Freegold Ventures Limited. It trades about 0.09 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about 0.09 per unit of risk. If you would invest  61.00  in Neo Battery Materials on December 28, 2024 and sell it today you would lose (9.00) from holding Neo Battery Materials or give up 14.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Neo Battery Materials  vs.  Freegold Ventures Limited

Neo Battery Materials

Risk-Adjusted Performance

OK

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

Freegold Ventures

Risk-Adjusted Performance

OK

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

Pair Trading with Neo Battery and Freegold Ventures

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

The idea behind Neo Battery Materials and Freegold Ventures Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.