Correlation Between Saint Jean and Vital Metals

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

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

Diversification Opportunities for Saint Jean and Vital Metals

-0.11

Correlation Coefficient

Saint Jean  Vital Metals

Good diversification

The 3 months correlation between Saint and Vital is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Saint Jean Carbon and Vital Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Metals Limited and Saint Jean 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 Saint Jean Carbon are associated (or correlated) with Vital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Metals Limited has no effect on the direction of Saint Jean i.e., Saint Jean and Vital Metals go up and down completely randomly.

Pair Corralation between Saint Jean and Vital Metals

Assuming the 90 days horizon Saint Jean is expected to generate 2.09 times less return on investment than Vital Metals. But when comparing it to its historical volatility, Saint Jean Carbon is 1.38 times less risky than Vital Metals. It trades about 0.06 of its potential returns per unit of risk. Vital Metals Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.22  in Vital Metals Limited on September 2, 2024 and sell it today you would lose (0.02) from holding Vital Metals Limited or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Saint Jean Carbon  vs.  Vital Metals Limited

Saint Jean Carbon

Risk-Adjusted Performance

4 of 100

Insignificant

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

Vital Metals Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Metals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vital Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saint Jean and Vital Metals

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

The idea behind Saint Jean Carbon and Vital Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.