Correlation Between Western Metal and Mango Excellent

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

By analyzing existing cross correlation between Western Metal Materials and Mango Excellent Media, you can compare the effects of market volatilities on Western Metal and Mango Excellent 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 Western Metal with a short position of Mango Excellent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and Mango Excellent.

Diversification Opportunities for Western Metal and Mango Excellent

0.6

Correlation Coefficient

Western Metal  Mango Excellent

Poor diversification

The 3 months correlation between Western and Mango is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials and Mango Excellent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mango Excellent Media and Western Metal 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 Western Metal Materials are associated (or correlated) with Mango Excellent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mango Excellent Media has no effect on the direction of Western Metal i.e., Western Metal and Mango Excellent go up and down completely randomly.

Pair Corralation between Western Metal and Mango Excellent

Assuming the 90 days trading horizon Western Metal Materials is expected to under-perform the Mango Excellent. In addition to that, Western Metal is 1.19 times more volatile than Mango Excellent Media. It trades about -0.05 of its total potential returns per unit of risk. Mango Excellent Media is currently generating about -0.06 per unit of volatility. If you would invest  2,688  in Mango Excellent Media on October 6, 2024 and sell it today you would lose (186.00) from holding Mango Excellent Media or give up 6.92% of portfolio value over 90 days.

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

Western Metal Materials  vs.  Mango Excellent Media

Western Metal Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Metal Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Western Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mango Excellent Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mango Excellent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Western Metal and Mango Excellent

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

The idea behind Western Metal Materials and Mango Excellent Media 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.