Correlation Between Eclectic Bar and Metals Exploration

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

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

Diversification Opportunities for Eclectic Bar and Metals Exploration

-0.23

Correlation Coefficient

Eclectic Bar  Metals Exploration

Very good diversification

The 3 months correlation between Eclectic and Metals is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eclectic Bar Group 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 Eclectic Bar 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 Eclectic Bar Group 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 Eclectic Bar i.e., Eclectic Bar and Metals Exploration go up and down completely randomly.

Pair Corralation between Eclectic Bar and Metals Exploration

Assuming the 90 days trading horizon Eclectic Bar is expected to generate 26.05 times less return on investment than Metals Exploration. But when comparing it to its historical volatility, Eclectic Bar Group is 17.04 times less risky than Metals Exploration. It trades about 0.23 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Metals Exploration Plc on October 12, 2024 and sell it today you would earn a total of  90.00  from holding Metals Exploration Plc or generate 17.48% return on investment over 90 days.

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

Eclectic Bar Group  vs.  Metals Exploration Plc

Eclectic Bar Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Metals Exploration Plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Metals Exploration may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eclectic Bar and Metals Exploration

The main advantage of trading using opposite Eclectic Bar and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eclectic Bar 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 Eclectic Bar Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.