Correlation Between EnviroTek Remediation and Caledonia Mining

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

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

Diversification Opportunities for EnviroTek Remediation and Caledonia Mining

0.55

Correlation Coefficient

EnviroTek Remediation  Caledonia Mining

Very weak diversification

The 3 months correlation between EnviroTek and Caledonia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EnviroTek Remediation and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and EnviroTek Remediation 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 EnviroTek Remediation are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of EnviroTek Remediation i.e., EnviroTek Remediation and Caledonia Mining go up and down completely randomly.

Pair Corralation between EnviroTek Remediation and Caledonia Mining

If you would invest  41.00  in EnviroTek Remediation on February 7, 2024 and sell it today you would earn a total of  0.00  from holding EnviroTek Remediation or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

EnviroTek Remediation  vs.  Caledonia Mining

EnviroTek Remediation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnviroTek Remediation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EnviroTek Remediation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Caledonia Mining is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with EnviroTek Remediation and Caledonia Mining

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

The idea behind EnviroTek Remediation and Caledonia Mining 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.