Correlation Between Metallurgical and Rising Nonferrous

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

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

Diversification Opportunities for Metallurgical and Rising Nonferrous

0.86

Correlation Coefficient

Metallurgical  Rising Nonferrous

Very poor diversification

The 3 months correlation between Metallurgical and Rising is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and Rising Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Nonferrous Metals and Metallurgical 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 Metallurgical of are associated (or correlated) with Rising Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Nonferrous Metals has no effect on the direction of Metallurgical i.e., Metallurgical and Rising Nonferrous go up and down completely randomly.

Pair Corralation between Metallurgical and Rising Nonferrous

Assuming the 90 days trading horizon Metallurgical of is expected to generate 0.84 times more return on investment than Rising Nonferrous. However, Metallurgical of is 1.19 times less risky than Rising Nonferrous. It trades about 0.02 of its potential returns per unit of risk. Rising Nonferrous Metals is currently generating about -0.02 per unit of risk. If you would invest  316.00  in Metallurgical of on September 26, 2024 and sell it today you would earn a total of  21.00  from holding Metallurgical of or generate 6.65% return on investment over 90 days.

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

Metallurgical of  vs.  Rising Nonferrous Metals

Metallurgical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metallurgical of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metallurgical sustained solid returns over the last few months and may actually be approaching a breakup point.

Rising Nonferrous Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Nonferrous Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rising Nonferrous sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metallurgical and Rising Nonferrous

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

The idea behind Metallurgical of and Rising Nonferrous 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.