Correlation Between CMC Metals and Sable Resources

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

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

Diversification Opportunities for CMC Metals and Sable Resources

-0.07

Correlation Coefficient

CMC Metals  Sable Resources

Good diversification

The 3 months correlation between CMC and Sable is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources and CMC Metals 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 CMC Metals are associated (or correlated) with Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of CMC Metals i.e., CMC Metals and Sable Resources go up and down completely randomly.

Pair Corralation between CMC Metals and Sable Resources

Assuming the 90 days horizon CMC Metals is expected to generate 0.92 times more return on investment than Sable Resources. However, CMC Metals is 1.08 times less risky than Sable Resources. It trades about 0.02 of its potential returns per unit of risk. Sable Resources is currently generating about 0.0 per unit of risk. If you would invest  9.69  in CMC Metals on May 1, 2025 and sell it today you would lose (0.18) from holding CMC Metals or give up 1.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.3%
Values	Daily Returns

CMC Metals  vs.  Sable Resources

CMC Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CMC Metals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Sable Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CMC Metals and Sable Resources

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

The idea behind CMC Metals and Sable Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.