Correlation Between Capital Metals and Rightmove PLC

Can any of the company-specific risk be diversified away by investing in both Capital Metals and Rightmove PLC 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 Rightmove PLC 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 Rightmove PLC, you can compare the effects of market volatilities on Capital Metals and Rightmove PLC 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 Rightmove PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Rightmove PLC.

Diversification Opportunities for Capital Metals and Rightmove PLC

0.3

Correlation Coefficient

Capital Metals  Rightmove PLC

Weak diversification

The 3 months correlation between Capital and Rightmove is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Rightmove PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightmove 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 Rightmove PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightmove PLC has no effect on the direction of Capital Metals i.e., Capital Metals and Rightmove PLC go up and down completely randomly.

Pair Corralation between Capital Metals and Rightmove PLC

Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 4.85 times more return on investment than Rightmove PLC. However, Capital Metals is 4.85 times more volatile than Rightmove PLC. It trades about 0.03 of its potential returns per unit of risk. Rightmove PLC is currently generating about 0.02 per unit of risk. If you would invest  275.00  in Capital Metals PLC on October 24, 2024 and sell it today you would lose (110.00) from holding Capital Metals PLC or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capital Metals PLC  vs.  Rightmove 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rightmove PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rightmove PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Rightmove PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Capital Metals and Rightmove PLC

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

The idea behind Capital Metals PLC and Rightmove 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..