Correlation Between Simply Better and C3 Metals

Can any of the company-specific risk be diversified away by investing in both Simply Better and C3 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 Simply Better and C3 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simply Better Brands and C3 Metals, you can compare the effects of market volatilities on Simply Better and C3 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 Simply Better with a short position of C3 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Better and C3 Metals.

Diversification Opportunities for Simply Better and C3 Metals

0.19

Correlation Coefficient

Simply Better  C3 Metals

Average diversification

The 3 months correlation between Simply and CCCM is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Simply Better Brands and C3 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 Metals and Simply Better 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 Simply Better Brands are associated (or correlated) with C3 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Metals has no effect on the direction of Simply Better i.e., Simply Better and C3 Metals go up and down completely randomly.

Pair Corralation between Simply Better and C3 Metals

Assuming the 90 days trading horizon Simply Better Brands is expected to under-perform the C3 Metals. But the stock apears to be less risky and, when comparing its historical volatility, Simply Better Brands is 2.46 times less risky than C3 Metals. The stock trades about -0.1 of its potential returns per unit of risk. The C3 Metals is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest  28.00  in C3 Metals on December 2, 2024 and sell it today you would earn a total of  36.00  from holding C3 Metals or generate 128.57% return on investment over 90 days.

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

Simply Better Brands  vs.  C3 Metals

Simply Better Brands

Risk-Adjusted Performance

Very Weak

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

C3 Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in C3 Metals are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, C3 Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simply Better and C3 Metals

The main advantage of trading using opposite Simply Better and C3 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Better position performs unexpectedly, C3 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 C3 Metals will offset losses from the drop in C3 Metals' long position.

The idea behind Simply Better Brands and C3 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.