Correlation Between IperionX Limited and Brazil Potash

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

By analyzing existing cross correlation between IperionX Limited American and Brazil Potash Corp, you can compare the effects of market volatilities on IperionX Limited and Brazil Potash 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 IperionX Limited with a short position of Brazil Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of IperionX Limited and Brazil Potash.

Diversification Opportunities for IperionX Limited and Brazil Potash

-0.34

Correlation Coefficient

IperionX Limited  Brazil Potash

Very good diversification

The 3 months correlation between IperionX and Brazil is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding IperionX Limited American and Brazil Potash Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brazil Potash Corp and IperionX Limited 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 IperionX Limited American are associated (or correlated) with Brazil Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brazil Potash Corp has no effect on the direction of IperionX Limited i.e., IperionX Limited and Brazil Potash go up and down completely randomly.

Pair Corralation between IperionX Limited and Brazil Potash

Considering the 90-day investment horizon IperionX Limited American is expected to generate 0.54 times more return on investment than Brazil Potash. However, IperionX Limited American is 1.86 times less risky than Brazil Potash. It trades about 0.2 of its potential returns per unit of risk. Brazil Potash Corp is currently generating about -0.03 per unit of risk. If you would invest  2,146  in IperionX Limited American on May 5, 2025 and sell it today you would earn a total of  1,632  from holding IperionX Limited American or generate 76.05% return on investment over 90 days.

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

IperionX Limited American  vs.  Brazil Potash Corp

IperionX Limited American

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Brazil Potash Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brazil Potash Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IperionX Limited and Brazil Potash

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

The idea behind IperionX Limited American and Brazil Potash 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.