Correlation Between ValOre Metals and Richelieu Hardware

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

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

Diversification Opportunities for ValOre Metals and Richelieu Hardware

-0.01

Correlation Coefficient

ValOre Metals  Richelieu Hardware

Good diversification

The 3 months correlation between ValOre and Richelieu is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware and ValOre Metals 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 ValOre Metals Corp are associated (or correlated) with Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of ValOre Metals i.e., ValOre Metals and Richelieu Hardware go up and down completely randomly.

Pair Corralation between ValOre Metals and Richelieu Hardware

Given the investment horizon of 90 days ValOre Metals Corp is expected to under-perform the Richelieu Hardware. In addition to that, ValOre Metals is 4.78 times more volatile than Richelieu Hardware. It trades about -0.03 of its total potential returns per unit of risk. Richelieu Hardware is currently generating about -0.1 per unit of volatility. If you would invest  4,028  in Richelieu Hardware on December 1, 2024 and sell it today you would lose (363.00) from holding Richelieu Hardware or give up 9.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ValOre Metals Corp  vs.  Richelieu Hardware

ValOre Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ValOre Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Richelieu Hardware

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richelieu Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ValOre Metals and Richelieu Hardware

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

The idea behind ValOre Metals Corp and Richelieu Hardware 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.