ASSESSMENT OF EFFICIENCY OF INVESTMENT IN COMPANIES BELONGING TO THE RARE EARTH METALS SECTOR
ASSESSMENT OF EFFICIENCY OF INVESTMENT IN COMPANIES BELONGING TO THE RARE EARTH METALS SECTOR

Summary/Abstract: Purpose – This paper aimed at assessing the efficiency of investment in companiesbelonging to the rare earth elements sector and examining the stability of the results.Research method – The following performance measures were used in the study:modi­ fied Sharpe and Omega, Sortino, Calmar, Sterling and Burke ratios. The investi‑gation is based on daily quotations of selected companies whose business activities wererelated to extraction, processing and recycling of rare earth metals in the period: from July2018 to June 2023 and MVIS® Global Rare Earth/Strategic Metals Index representingthe global market.Results – The analysis for the entire period revealed a worse performance of invest‑ments in rare earth stocks than investment in risk-free assets. Only AREC outperformedother securities offering the best results for 3 of 6 ratios. To examine the stability of theresults, the total investigation period was divided into 5 subperiods and all performanceratios were determined for each of them. A strong variation of results did not allow torecognise stable patterns. When the results for the entire investigation period were usedas a benchmark, only MVREMX offered stable and attractive results of modified Sharperatio outperforming the five-year value in 4 out of 5 subperiods.Originality   / value   / implications   / recommendations – This study provides a new insightinto the rare earths sector regarding its growing international importance and the effi‑ciency of investments into listed rare earth firms. The examination uses two-dimensionalmeasures offering the advantage of simultaneously combining return and risk into a sin‑gle performance number. The findings imply the necessity of improving the stock priceperformance to attract investors’ interest.

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