Correlation Between Chatham Rock and Sprott

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

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

Diversification Opportunities for Chatham Rock and Sprott

-0.35

Correlation Coefficient

Chatham Rock  Sprott

Very good diversification

The 3 months correlation between Chatham and Sprott is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chatham Rock Phosphate and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and Chatham Rock 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 Chatham Rock Phosphate are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of Chatham Rock i.e., Chatham Rock and Sprott go up and down completely randomly.

Pair Corralation between Chatham Rock and Sprott

Assuming the 90 days horizon Chatham Rock Phosphate is expected to under-perform the Sprott. In addition to that, Chatham Rock is 5.74 times more volatile than Sprott Inc. It trades about -0.05 of its total potential returns per unit of risk. Sprott Inc is currently generating about 0.36 per unit of volatility. If you would invest  7,237  in Sprott Inc on April 24, 2025 and sell it today you would earn a total of  2,600  from holding Sprott Inc or generate 35.93% return on investment over 90 days.

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

Chatham Rock Phosphate  vs.  Sprott Inc

Chatham Rock Phosphate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chatham Rock Phosphate 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 August 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sprott Inc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Sprott displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chatham Rock and Sprott

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

The idea behind Chatham Rock Phosphate and Sprott Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.