Correlation Between Coles and Ragnar Metals

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

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

Diversification Opportunities for Coles and Ragnar Metals

-0.67

Correlation Coefficient

Coles  Ragnar Metals

Excellent diversification

The 3 months correlation between Coles and Ragnar is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Ragnar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ragnar Metals and Coles 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 Coles Group are associated (or correlated) with Ragnar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ragnar Metals has no effect on the direction of Coles i.e., Coles and Ragnar Metals go up and down completely randomly.

Pair Corralation between Coles and Ragnar Metals

Assuming the 90 days trading horizon Coles Group is expected to generate 0.26 times more return on investment than Ragnar Metals. However, Coles Group is 3.91 times less risky than Ragnar Metals. It trades about 0.12 of its potential returns per unit of risk. Ragnar Metals is currently generating about -0.11 per unit of risk. If you would invest  1,816  in Coles Group on October 23, 2024 and sell it today you would earn a total of  103.00  from holding Coles Group or generate 5.67% return on investment over 90 days.

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

Coles Group  vs.  Ragnar Metals

Coles Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Coles is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ragnar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ragnar Metals 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 technical and fundamental 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.

Pair Trading with Coles and Ragnar Metals

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

The idea behind Coles Group and Ragnar Metals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.