Correlation Between Sigma Lithium and Callinex Mines

Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and Callinex Mines 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 Sigma Lithium and Callinex Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sigma Lithium Resources and Callinex Mines, you can compare the effects of market volatilities on Sigma Lithium and Callinex Mines 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 Sigma Lithium with a short position of Callinex Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Callinex Mines.

Diversification Opportunities for Sigma Lithium and Callinex Mines

0.26

Correlation Coefficient

Sigma Lithium  Callinex Mines

Modest diversification

The 3 months correlation between Sigma and Callinex is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and Callinex Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callinex Mines and Sigma Lithium 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 Sigma Lithium Resources are associated (or correlated) with Callinex Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callinex Mines has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and Callinex Mines go up and down completely randomly.

Pair Corralation between Sigma Lithium and Callinex Mines

Given the investment horizon of 90 days Sigma Lithium is expected to generate 1.72 times less return on investment than Callinex Mines. But when comparing it to its historical volatility, Sigma Lithium Resources is 1.17 times less risky than Callinex Mines. It trades about 0.04 of its potential returns per unit of risk. Callinex Mines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Callinex Mines on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Callinex Mines or generate 8.47% return on investment over 90 days.

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

Sigma Lithium Resources  vs.  Callinex Mines

Sigma Lithium Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sigma Lithium Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Sigma Lithium may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Callinex Mines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Callinex Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Callinex Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sigma Lithium and Callinex Mines

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

The idea behind Sigma Lithium Resources and Callinex Mines 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.