Correlation Between Azucar Minerals and Equity Metals

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

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

Diversification Opportunities for Azucar Minerals and Equity Metals

-0.12

Correlation Coefficient

Azucar Minerals  Equity Metals

Good diversification

The 3 months correlation between Azucar and Equity is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Azucar Minerals and Equity Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals and Azucar 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 Azucar Minerals are associated (or correlated) with Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals has no effect on the direction of Azucar Minerals i.e., Azucar Minerals and Equity Metals go up and down completely randomly.

Pair Corralation between Azucar Minerals and Equity Metals

Assuming the 90 days horizon Azucar Minerals is expected to generate 2.1 times more return on investment than Equity Metals. However, Azucar Minerals is 2.1 times more volatile than Equity Metals. It trades about 0.06 of its potential returns per unit of risk. Equity Metals is currently generating about 0.07 per unit of risk. If you would invest  2.10  in Azucar Minerals on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Azucar Minerals or generate 0.0% return on investment over 90 days.

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

Azucar Minerals  vs.  Equity Metals

Azucar Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Azucar Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Azucar Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Equity Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Equity Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azucar Minerals and Equity Metals

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

The idea behind Azucar Minerals and Equity 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 Stocks Directory module to find actively traded stocks across global markets.