Correlation Between Yellow Cake and ValOre Metals

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

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

Diversification Opportunities for Yellow Cake and ValOre Metals

0.5

Correlation Coefficient

Yellow Cake  ValOre Metals

Very weak diversification

The 3 months correlation between Yellow and ValOre is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Cake plc and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp and Yellow Cake 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 Yellow Cake plc are associated (or correlated) with ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of Yellow Cake i.e., Yellow Cake and ValOre Metals go up and down completely randomly.

Pair Corralation between Yellow Cake and ValOre Metals

Assuming the 90 days horizon Yellow Cake plc is expected to generate 0.43 times more return on investment than ValOre Metals. However, Yellow Cake plc is 2.31 times less risky than ValOre Metals. It trades about -0.05 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about -0.03 per unit of risk. If you would invest  641.00  in Yellow Cake plc on December 26, 2024 and sell it today you would lose (70.00) from holding Yellow Cake plc or give up 10.92% of portfolio value over 90 days.

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

Yellow Cake plc  vs.  ValOre Metals Corp

Yellow Cake plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Cake plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Yellow Cake and ValOre Metals

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

The idea behind Yellow Cake plc and ValOre Metals 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.