Correlation Between Commerce Resources and Metals X

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

By analyzing existing cross correlation between Commerce Resources Corp and Metals X Limited, you can compare the effects of market volatilities on Commerce Resources and Metals X 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 Commerce Resources with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Resources and Metals X.

Diversification Opportunities for Commerce Resources and Metals X

0.46

Correlation Coefficient

Commerce Resources  Metals X

Very weak diversification

The 3 months correlation between Commerce and Metals is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Resources Corp and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and Commerce Resources 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 Commerce Resources Corp are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Commerce Resources i.e., Commerce Resources and Metals X go up and down completely randomly.

Pair Corralation between Commerce Resources and Metals X

Assuming the 90 days horizon Commerce Resources is expected to generate 2.05 times less return on investment than Metals X. In addition to that, Commerce Resources is 1.94 times more volatile than Metals X Limited. It trades about 0.02 of its total potential returns per unit of risk. Metals X Limited is currently generating about 0.06 per unit of volatility. If you would invest  23.00  in Metals X Limited on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Metals X Limited or generate 13.04% return on investment over 90 days.

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

Commerce Resources Corp  vs.  Metals X Limited

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Metals X Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commerce Resources and Metals X

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

The idea behind Commerce Resources Corp and Metals X Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.