Correlation Between Ivanhoe Mines and Velox Energy

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Can any of the company-specific risk be diversified away by investing in both Ivanhoe Mines and Velox Energy 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 Ivanhoe Mines and Velox Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Mines and Velox Energy Materials, you can compare the effects of market volatilities on Ivanhoe Mines and Velox Energy 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 Ivanhoe Mines with a short position of Velox Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Mines and Velox Energy.

Diversification Opportunities for Ivanhoe Mines and Velox Energy

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ivanhoe and Velox is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Velox Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velox Energy Materials and Ivanhoe Mines 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 Ivanhoe Mines are associated (or correlated) with Velox Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velox Energy Materials has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Velox Energy go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Velox Energy

Assuming the 90 days trading horizon Ivanhoe Mines is expected to under-perform the Velox Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Mines is 2.27 times less risky than Velox Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Velox Energy Materials is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Velox Energy Materials on March 12, 2024 and sell it today you would earn a total of  1.00  from holding Velox Energy Materials or generate 14.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.0%
ValuesDaily Returns

Ivanhoe Mines  vs.  Velox Energy Materials

 Performance 
       Timeline  
Ivanhoe Mines 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Mines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ivanhoe Mines displayed solid returns over the last few months and may actually be approaching a breakup point.
Velox Energy Materials 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Velox Energy Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Velox Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Mines and Velox Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ivanhoe Mines and Velox Energy

The main advantage of trading using opposite Ivanhoe Mines and Velox Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Mines position performs unexpectedly, Velox Energy 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 Velox Energy will offset losses from the drop in Velox Energy's long position.
The idea behind Ivanhoe Mines and Velox Energy Materials 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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