Correlation Between Amaroq Minerals and Metals Exploration

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

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

Diversification Opportunities for Amaroq Minerals and Metals Exploration

0.47

Correlation Coefficient

Amaroq Minerals  Metals Exploration

Very weak diversification

The 3 months correlation between Amaroq and Metals is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amaroq Minerals and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration Plc and Amaroq Minerals 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 Amaroq Minerals are associated (or correlated) with Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Amaroq Minerals i.e., Amaroq Minerals and Metals Exploration go up and down completely randomly.

Pair Corralation between Amaroq Minerals and Metals Exploration

Assuming the 90 days trading horizon Amaroq Minerals is expected to generate 0.67 times more return on investment than Metals Exploration. However, Amaroq Minerals is 1.5 times less risky than Metals Exploration. It trades about 0.1 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about 0.02 per unit of risk. If you would invest  8,600  in Amaroq Minerals on November 29, 2024 and sell it today you would earn a total of  1,250  from holding Amaroq Minerals or generate 14.53% return on investment over 90 days.

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

Amaroq Minerals  vs.  Metals Exploration Plc

Amaroq Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amaroq Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amaroq Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Metals Exploration Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Metals Exploration is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amaroq Minerals and Metals Exploration

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

The idea behind Amaroq Minerals and Metals Exploration Plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.