Correlation Between South Star and Syrah Resources

Can any of the company-specific risk be diversified away by investing in both South Star and Syrah Resources 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 South Star and Syrah Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between South Star Battery and Syrah Resources Limited, you can compare the effects of market volatilities on South Star and Syrah Resources 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 South Star with a short position of Syrah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Syrah Resources.

Diversification Opportunities for South Star and Syrah Resources

-0.26

Correlation Coefficient

South Star  Syrah Resources

Very good diversification

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

Pair Corralation between South Star and Syrah Resources

Assuming the 90 days horizon South Star Battery is expected to under-perform the Syrah Resources. In addition to that, South Star is 1.1 times more volatile than Syrah Resources Limited. It trades about -0.03 of its total potential returns per unit of risk. Syrah Resources Limited is currently generating about 0.16 per unit of volatility. If you would invest  12.00  in Syrah Resources Limited on December 20, 2024 and sell it today you would earn a total of  8.00  from holding Syrah Resources Limited or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

South Star Battery  vs.  Syrah Resources Limited

South Star Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Star Battery 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 fundamental drivers 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.

Syrah Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrah Resources Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Syrah Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with South Star and Syrah Resources

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

The idea behind South Star Battery and Syrah Resources 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 Commodity Directory module to find actively traded commodities issued by global exchanges.