Correlation Between CHAMPION IRON and CAMECO

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

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

Diversification Opportunities for CHAMPION IRON and CAMECO

-0.04

Correlation Coefficient

CHAMPION IRON  CAMECO

Good diversification

The 3 months correlation between CHAMPION and CAMECO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON and CAMECO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMECO and CHAMPION IRON 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 CHAMPION IRON are associated (or correlated) with CAMECO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMECO has no effect on the direction of CHAMPION IRON i.e., CHAMPION IRON and CAMECO go up and down completely randomly.

Pair Corralation between CHAMPION IRON and CAMECO

Assuming the 90 days trading horizon CHAMPION IRON is expected to generate 3.68 times less return on investment than CAMECO. But when comparing it to its historical volatility, CHAMPION IRON is 1.1 times less risky than CAMECO. It trades about 0.11 of its potential returns per unit of risk. CAMECO is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  3,499  in CAMECO on April 21, 2025 and sell it today you would earn a total of  3,275  from holding CAMECO or generate 93.6% return on investment over 90 days.

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

CHAMPION IRON  vs.  CAMECO

CHAMPION IRON

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION IRON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHAMPION IRON reported solid returns over the last few months and may actually be approaching a breakup point.

CAMECO

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CAMECO are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAMECO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHAMPION IRON and CAMECO

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

The idea behind CHAMPION IRON and CAMECO 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.