Correlation Between Roper Technologies and Cornish Metals

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

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

Diversification Opportunities for Roper Technologies and Cornish Metals

-0.07

Correlation Coefficient

Roper Technologies  Cornish Metals

Good diversification

The 3 months correlation between Roper and Cornish is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Roper Technologies 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 Roper Technologies are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Roper Technologies i.e., Roper Technologies and Cornish Metals go up and down completely randomly.

Pair Corralation between Roper Technologies and Cornish Metals

Assuming the 90 days trading horizon Roper Technologies is expected to generate 0.28 times more return on investment than Cornish Metals. However, Roper Technologies is 3.63 times less risky than Cornish Metals. It trades about 0.12 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.06 per unit of risk. If you would invest  54,605  in Roper Technologies on August 31, 2024 and sell it today you would earn a total of  1,712  from holding Roper Technologies or generate 3.14% return on investment over 90 days.

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

Roper Technologies  vs.  Cornish Metals

Roper Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Roper Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cornish Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roper Technologies and Cornish Metals

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

The idea behind Roper Technologies and Cornish Metals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.