Correlation Between Viscount Mining and CMC Metals

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

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

Diversification Opportunities for Viscount Mining and CMC Metals

-0.43

Correlation Coefficient

Viscount Mining  CMC Metals

Very good diversification

The 3 months correlation between Viscount and CMC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Viscount Mining Corp and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals and Viscount 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 Viscount Mining Corp are associated (or correlated) with CMC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Metals has no effect on the direction of Viscount Mining i.e., Viscount Mining and CMC Metals go up and down completely randomly.

Pair Corralation between Viscount Mining and CMC Metals

Assuming the 90 days horizon Viscount Mining Corp is expected to generate 0.37 times more return on investment than CMC Metals. However, Viscount Mining Corp is 2.71 times less risky than CMC Metals. It trades about 0.31 of its potential returns per unit of risk. CMC Metals is currently generating about 0.03 per unit of risk. If you would invest  16.00  in Viscount Mining Corp on December 29, 2024 and sell it today you would earn a total of  28.00  from holding Viscount Mining Corp or generate 175.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.26%
Values	Daily Returns

Viscount Mining Corp  vs.  CMC Metals

Viscount Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Viscount Mining Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Viscount Mining reported solid returns over the last few months and may actually be approaching a breakup point.

CMC Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CMC Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viscount Mining and CMC Metals

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

The idea behind Viscount Mining Corp and CMC Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.