Correlation Between Sherritt International and Chalice Mining

Can any of the company-specific risk be diversified away by investing in both Sherritt International and Chalice Mining 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 Sherritt International and Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sherritt International and Chalice Mining Limited, you can compare the effects of market volatilities on Sherritt International and Chalice Mining 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 Sherritt International with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherritt International and Chalice Mining.

Diversification Opportunities for Sherritt International and Chalice Mining

-0.2

Correlation Coefficient

Sherritt International  Chalice Mining

Good diversification

The 3 months correlation between Sherritt and Chalice is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sherritt International and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and Sherritt International 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 Sherritt International are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Sherritt International i.e., Sherritt International and Chalice Mining go up and down completely randomly.

Pair Corralation between Sherritt International and Chalice Mining

Assuming the 90 days horizon Sherritt International is expected to generate 1.05 times less return on investment than Chalice Mining. In addition to that, Sherritt International is 2.53 times more volatile than Chalice Mining Limited. It trades about 0.04 of its total potential returns per unit of risk. Chalice Mining Limited is currently generating about 0.11 per unit of volatility. If you would invest  67.00  in Chalice Mining Limited on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Chalice Mining Limited or generate 37.31% return on investment over 90 days.

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

Sherritt International  vs.  Chalice Mining Limited

Sherritt International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sherritt International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sherritt International reported solid returns over the last few months and may actually be approaching a breakup point.

Chalice Mining

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Sherritt International and Chalice Mining

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

The idea behind Sherritt International and Chalice Mining Limited 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.