Correlation Between Global Battery and Blue Moon

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

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

Diversification Opportunities for Global Battery and Blue Moon

0.3

Correlation Coefficient

Global Battery  Blue Moon

Weak diversification

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

Pair Corralation between Global Battery and Blue Moon

Assuming the 90 days horizon Global Battery Metals is expected to generate 7.73 times more return on investment than Blue Moon. However, Global Battery is 7.73 times more volatile than Blue Moon Metals. It trades about 0.11 of its potential returns per unit of risk. Blue Moon Metals is currently generating about -0.09 per unit of risk. If you would invest  1.60  in Global Battery Metals on September 22, 2024 and sell it today you would earn a total of  0.22  from holding Global Battery Metals or generate 13.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Global Battery Metals  vs.  Blue Moon Metals

Global Battery Metals

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Battery Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Global Battery and Blue Moon

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

The idea behind Global Battery Metals and Blue Moon 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.