Correlation Between Compagnie and Metalliance

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

By analyzing existing cross correlation between Compagnie du Cambodge and Metalliance SA, you can compare the effects of market volatilities on Compagnie and Metalliance 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 Compagnie with a short position of Metalliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Metalliance.

Diversification Opportunities for Compagnie and Metalliance

0.0

Correlation Coefficient

Compagnie  Metalliance

Pay attention - limited upside

The 3 months correlation between Compagnie and Metalliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Metalliance SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalliance SA and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Metalliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalliance SA has no effect on the direction of Compagnie i.e., Compagnie and Metalliance go up and down completely randomly.

Pair Corralation between Compagnie and Metalliance

If you would invest  955,000  in Compagnie du Cambodge on September 24, 2024 and sell it today you would lose (944,900) from holding Compagnie du Cambodge or give up 98.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Compagnie du Cambodge  vs.  Metalliance SA

Compagnie du Cambodge

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Metalliance SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalliance SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Metalliance is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compagnie and Metalliance

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

The idea behind Compagnie du Cambodge and Metalliance SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.