Correlation Between Sherritt International and Cornish Metals

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

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

Diversification Opportunities for Sherritt International and Cornish Metals

0.25

Correlation Coefficient

Sherritt International  Cornish Metals

Modest diversification

The 3 months correlation between Sherritt and Cornish is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sherritt International and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Sherritt International i.e., Sherritt International and Cornish Metals go up and down completely randomly.

Pair Corralation between Sherritt International and Cornish Metals

Assuming the 90 days horizon Sherritt International is expected to generate 1.29 times more return on investment than Cornish Metals. However, Sherritt International is 1.29 times more volatile than Cornish Metals. It trades about 0.04 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.02 per unit of risk. If you would invest  15.00  in Sherritt International on September 3, 2024 and sell it today you would lose (3.00) from holding Sherritt International or give up 20.0% of portfolio value over 90 days.

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

Sherritt International  vs.  Cornish Metals

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.

Cornish Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Cornish Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sherritt International and Cornish Metals

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

The idea behind Sherritt International and Cornish 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..