Correlation Between RIO Tinto and Cleanspace Holdings

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

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

Diversification Opportunities for RIO Tinto and Cleanspace Holdings

-0.18

Correlation Coefficient

RIO Tinto  Cleanspace Holdings

Good diversification

The 3 months correlation between RIO and Cleanspace is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding RIO Tinto and Cleanspace Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanspace Holdings and RIO Tinto 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 RIO Tinto are associated (or correlated) with Cleanspace Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanspace Holdings has no effect on the direction of RIO Tinto i.e., RIO Tinto and Cleanspace Holdings go up and down completely randomly.

Pair Corralation between RIO Tinto and Cleanspace Holdings

Assuming the 90 days trading horizon RIO Tinto is expected to generate 35.08 times less return on investment than Cleanspace Holdings. But when comparing it to its historical volatility, RIO Tinto is 3.37 times less risky than Cleanspace Holdings. It trades about 0.02 of its potential returns per unit of risk. Cleanspace Holdings is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Cleanspace Holdings on April 22, 2025 and sell it today you would earn a total of  31.00  from holding Cleanspace Holdings or generate 79.49% return on investment over 90 days.

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

RIO Tinto  vs.  Cleanspace Holdings

RIO Tinto

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RIO Tinto are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RIO Tinto is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cleanspace Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanspace Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cleanspace Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RIO Tinto and Cleanspace Holdings

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

The idea behind RIO Tinto and Cleanspace Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.