Correlation Between Syrah Resources and Nouveau Monde

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

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

Diversification Opportunities for Syrah Resources and Nouveau Monde

0.74

Correlation Coefficient

Syrah Resources  Nouveau Monde

Poor diversification

The 3 months correlation between Syrah and Nouveau is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Syrah Resources Limited and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite and Syrah Resources 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 Syrah Resources Limited are associated (or correlated) with Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Syrah Resources i.e., Syrah Resources and Nouveau Monde go up and down completely randomly.

Pair Corralation between Syrah Resources and Nouveau Monde

Assuming the 90 days horizon Syrah Resources Limited is expected to generate 1.54 times more return on investment than Nouveau Monde. However, Syrah Resources is 1.54 times more volatile than Nouveau Monde Graphite. It trades about 0.02 of its potential returns per unit of risk. Nouveau Monde Graphite is currently generating about 0.03 per unit of risk. If you would invest  19.00  in Syrah Resources Limited on May 7, 2025 and sell it today you would lose (1.00) from holding Syrah Resources Limited or give up 5.26% of portfolio value over 90 days.

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

Syrah Resources Limited  vs.  Nouveau Monde Graphite

Syrah Resources

Risk-Adjusted Performance

Weak

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

Nouveau Monde Graphite

Risk-Adjusted Performance

Weak

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

Pair Trading with Syrah Resources and Nouveau Monde

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

The idea behind Syrah Resources Limited and Nouveau Monde Graphite 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.