Correlation Between Global Battery and Patriot Battery

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

Diversification Opportunities for Global Battery and Patriot Battery

0.34

Correlation Coefficient

Global Battery  Patriot Battery

Weak diversification

The 3 months correlation between Global and Patriot is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Global Battery Metals and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Global Battery i.e., Global Battery and Patriot Battery go up and down completely randomly.

Pair Corralation between Global Battery and Patriot Battery

Assuming the 90 days horizon Global Battery Metals is expected to generate 5.98 times more return on investment than Patriot Battery. However, Global Battery is 5.98 times more volatile than Patriot Battery Metals. It trades about 0.07 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.07 per unit of risk. If you would invest  16.00  in Global Battery Metals on December 21, 2024 and sell it today you would lose (8.00) from holding Global Battery Metals or give up 50.0% of portfolio value over 90 days.

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

Global Battery Metals  vs.  Patriot Battery Metals

Global Battery Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Battery Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Global Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Patriot Battery Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patriot Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Global Battery and Patriot Battery

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

The idea behind Global Battery Metals and Patriot Battery 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.