Correlation Between Capital Metals and Moonpig Group

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

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

Diversification Opportunities for Capital Metals and Moonpig Group

-0.22

Correlation Coefficient

Capital Metals  Moonpig Group

Very good diversification

The 3 months correlation between Capital and Moonpig is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Moonpig Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonpig Group PLC and Capital 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 Capital Metals PLC are associated (or correlated) with Moonpig Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonpig Group PLC has no effect on the direction of Capital Metals i.e., Capital Metals and Moonpig Group go up and down completely randomly.

Pair Corralation between Capital Metals and Moonpig Group

Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 0.46 times more return on investment than Moonpig Group. However, Capital Metals PLC is 2.2 times less risky than Moonpig Group. It trades about -0.33 of its potential returns per unit of risk. Moonpig Group PLC is currently generating about -0.33 per unit of risk. If you would invest  190.00  in Capital Metals PLC on October 9, 2024 and sell it today you would lose (20.00) from holding Capital Metals PLC or give up 10.53% of portfolio value over 90 days.

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

Capital Metals PLC  vs.  Moonpig Group PLC

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Moonpig Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonpig Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Moonpig Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capital Metals and Moonpig Group

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

The idea behind Capital Metals PLC and Moonpig Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.