Correlation Between Canada Rare and Helium One

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

By analyzing existing cross correlation between Canada Rare Earth and Helium One Global, you can compare the effects of market volatilities on Canada Rare and Helium One 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 Canada Rare with a short position of Helium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Helium One.

Diversification Opportunities for Canada Rare and Helium One

-0.1

Correlation Coefficient

Canada Rare  Helium One

Good diversification

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

Pair Corralation between Canada Rare and Helium One

Assuming the 90 days horizon Canada Rare Earth is not expected to generate positive returns. Moreover, Canada Rare is 2.26 times more volatile than Helium One Global. It trades away all of its potential returns to assume current level of volatility. Helium One Global is currently generating about 0.18 per unit of risk. If you would invest  1.40  in Helium One Global on October 11, 2024 and sell it today you would earn a total of  0.60  from holding Helium One Global or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Canada Rare Earth  vs.  Helium One Global

Canada Rare Earth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canada Rare Earth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Canada Rare reported solid returns over the last few months and may actually be approaching a breakup point.

Helium One Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helium One Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Helium One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Rare and Helium One

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

The idea behind Canada Rare Earth and Helium One Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.