Correlation Between Sayona Mining and Vale SA

Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Vale SA 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 Vale SA 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 Vale SA ADR, you can compare the effects of market volatilities on Sayona Mining and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Vale SA.

Diversification Opportunities for Sayona Mining and Vale SA

-0.61

Correlation Coefficient

Sayona Mining  Vale SA

Excellent diversification

The 3 months correlation between Sayona and Vale is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of Sayona Mining i.e., Sayona Mining and Vale SA go up and down completely randomly.

Pair Corralation between Sayona Mining and Vale SA

Assuming the 90 days horizon Sayona Mining Limited is expected to under-perform the Vale SA. In addition to that, Sayona Mining is 5.54 times more volatile than Vale SA ADR. It trades about -0.05 of its total potential returns per unit of risk. Vale SA ADR is currently generating about 0.18 per unit of volatility. If you would invest  852.00  in Vale SA ADR on December 28, 2024 and sell it today you would earn a total of  152.00  from holding Vale SA ADR or generate 17.84% return on investment over 90 days.

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

Sayona Mining Limited  vs.  Vale SA ADR

Sayona Mining Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sayona Mining Limited 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 basic indicators 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.

Vale SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Vale SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sayona Mining and Vale SA

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

The idea behind Sayona Mining Limited and Vale SA ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.