Correlation Between Eastern and Critical Metals

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

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

Diversification Opportunities for Eastern and Critical Metals

-0.15

Correlation Coefficient

Eastern  Critical Metals

Good diversification

The 3 months correlation between Eastern and Critical is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and Eastern 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 Eastern Co are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Eastern i.e., Eastern and Critical Metals go up and down completely randomly.

Pair Corralation between Eastern and Critical Metals

Considering the 90-day investment horizon Eastern Co is expected to under-perform the Critical Metals. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 5.02 times less risky than Critical Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Critical Metals Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Critical Metals Corp on May 22, 2025 and sell it today you would earn a total of  405.00  from holding Critical Metals Corp or generate 259.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Eastern Co  vs.  Critical Metals Corp

Eastern

Risk-Adjusted Performance

Weakest

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

Critical Metals Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern and Critical Metals

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

The idea behind Eastern Co and Critical Metals Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.