Correlation Between Talga Group and Edison Cobalt

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

By analyzing existing cross correlation between Talga Group and Edison Cobalt Corp, you can compare the effects of market volatilities on Talga Group and Edison Cobalt 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 Talga Group with a short position of Edison Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talga Group and Edison Cobalt.

Diversification Opportunities for Talga Group and Edison Cobalt

-0.37

Correlation Coefficient

Talga Group  Edison Cobalt

Very good diversification

The 3 months correlation between Talga and Edison is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Talga Group and Edison Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Cobalt Corp and Talga Group 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 Talga Group are associated (or correlated) with Edison Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Cobalt Corp has no effect on the direction of Talga Group i.e., Talga Group and Edison Cobalt go up and down completely randomly.

Pair Corralation between Talga Group and Edison Cobalt

Assuming the 90 days horizon Talga Group is expected to generate 1.39 times more return on investment than Edison Cobalt. However, Talga Group is 1.39 times more volatile than Edison Cobalt Corp. It trades about 0.04 of its potential returns per unit of risk. Edison Cobalt Corp is currently generating about 0.03 per unit of risk. If you would invest  26.00  in Talga Group on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Talga Group or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Talga Group  vs.  Edison Cobalt Corp

Talga Group

Risk-Adjusted Performance

Insignificant

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

Edison Cobalt Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edison Cobalt Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Edison Cobalt may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Talga Group and Edison Cobalt

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

The idea behind Talga Group and Edison Cobalt Corp 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.