Correlation Between Cosmo Metals and Metro Mining
Can any of the company-specific risk be diversified away by investing in both Cosmo Metals and Metro Mining 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 Cosmo Metals and Metro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmo Metals and Metro Mining, you can compare the effects of market volatilities on Cosmo Metals and Metro Mining 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 Cosmo Metals with a short position of Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmo Metals and Metro Mining.
Diversification Opportunities for Cosmo Metals and Metro Mining
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cosmo and Metro is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and Cosmo 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 Cosmo Metals are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Metro Mining go up and down completely randomly.
Pair Corralation between Cosmo Metals and Metro Mining
Assuming the 90 days trading horizon Cosmo Metals is expected to generate 1.89 times more return on investment than Metro Mining. However, Cosmo Metals is 1.89 times more volatile than Metro Mining. It trades about 0.08 of its potential returns per unit of risk. Metro Mining is currently generating about -0.2 per unit of risk. If you would invest 1.90 in Cosmo Metals on October 11, 2024 and sell it today you would earn a total of 0.10 from holding Cosmo Metals or generate 5.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cosmo Metals vs. Metro Mining
Performance |
Timeline |
Cosmo Metals |
Metro Mining |
Cosmo Metals and Metro Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cosmo Metals and Metro Mining
The main advantage of trading using opposite Cosmo Metals and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmo Metals position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.Cosmo Metals vs. Metro Mining | Cosmo Metals vs. Auswide Bank | Cosmo Metals vs. Sequoia Financial Group | Cosmo Metals vs. Aspire Mining |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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