Correlation Between Sayona Mining and Jervois Mining

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

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

Diversification Opportunities for Sayona Mining and Jervois Mining

0.32

Correlation Coefficient

Sayona Mining  Jervois Mining

Weak diversification

The 3 months correlation between Sayona and Jervois is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Jervois Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jervois Mining and Sayona Mining 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 Sayona Mining Limited are associated (or correlated) with Jervois Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jervois Mining has no effect on the direction of Sayona Mining i.e., Sayona Mining and Jervois Mining go up and down completely randomly.

Pair Corralation between Sayona Mining and Jervois Mining

Assuming the 90 days horizon Sayona Mining Limited is expected to generate 0.84 times more return on investment than Jervois Mining. However, Sayona Mining Limited is 1.18 times less risky than Jervois Mining. It trades about 0.01 of its potential returns per unit of risk. Jervois Mining is currently generating about -0.02 per unit of risk. If you would invest  3.69  in Sayona Mining Limited on September 4, 2024 and sell it today you would lose (1.60) from holding Sayona Mining Limited or give up 43.36% of portfolio value over 90 days.

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

Sayona Mining Limited  vs.  Jervois Mining

Sayona Mining Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sayona Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sayona Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Jervois Mining

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Sayona Mining and Jervois Mining

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

The idea behind Sayona Mining Limited and Jervois Mining 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.