Correlation Between Alpha One and Metal Sky

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

By analyzing existing cross correlation between Alpha One and Metal Sky Star, you can compare the effects of market volatilities on Alpha One and Metal Sky 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 Alpha One with a short position of Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha One and Metal Sky.

Diversification Opportunities for Alpha One and Metal Sky

-0.24

Correlation Coefficient

Alpha One  Metal Sky

Very good diversification

The 3 months correlation between Alpha and Metal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star and Alpha One 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 Alpha One are associated (or correlated) with Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Alpha One i.e., Alpha One and Metal Sky go up and down completely randomly.

Pair Corralation between Alpha One and Metal Sky

If you would invest  5.01  in Metal Sky Star on December 28, 2024 and sell it today you would earn a total of  3.78  from holding Metal Sky Star or generate 75.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.68%
Values	Daily Returns

Alpha One  vs.  Metal Sky Star

Alpha One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alpha One is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Metal Sky Star

Risk-Adjusted Performance

Solid

Over the last 90 days Metal Sky Star has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal basic indicators, Metal Sky reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha One and Metal Sky

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

The idea behind Alpha One and Metal Sky Star 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.