Correlation Between BTU Metals and 00108WAK6

Can any of the company-specific risk be diversified away by investing in both BTU Metals and 00108WAK6 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 BTU Metals and 00108WAK6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTU Metals Corp and AEP Texas 345, you can compare the effects of market volatilities on BTU Metals and 00108WAK6 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 BTU Metals with a short position of 00108WAK6. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and 00108WAK6.

Diversification Opportunities for BTU Metals and 00108WAK6

-0.03

Correlation Coefficient

BTU Metals  00108WAK6

Good diversification

The 3 months correlation between BTU and 00108WAK6 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and AEP Texas 345 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP Texas 345 and BTU Metals 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 BTU Metals Corp are associated (or correlated) with 00108WAK6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP Texas 345 has no effect on the direction of BTU Metals i.e., BTU Metals and 00108WAK6 go up and down completely randomly.

Pair Corralation between BTU Metals and 00108WAK6

If you would invest  6,772  in AEP Texas 345 on October 27, 2024 and sell it today you would earn a total of  77.00  from holding AEP Texas 345 or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

BTU Metals Corp  vs.  AEP Texas 345

BTU Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, BTU Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AEP Texas 345

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP Texas 345 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAK6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BTU Metals and 00108WAK6

The main advantage of trading using opposite BTU Metals and 00108WAK6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, 00108WAK6 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 00108WAK6 will offset losses from the drop in 00108WAK6's long position.

The idea behind BTU Metals Corp and AEP Texas 345 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.