Correlation Between Cortus Metals and Rambler Metals

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

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

Diversification Opportunities for Cortus Metals and Rambler Metals

0.0

Correlation Coefficient

Cortus Metals  Rambler Metals

Pay attention - limited upside

The 3 months correlation between Cortus and Rambler is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cortus Metals and Rambler Metals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rambler Metals and Cortus 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 Cortus Metals are associated (or correlated) with Rambler Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rambler Metals has no effect on the direction of Cortus Metals i.e., Cortus Metals and Rambler Metals go up and down completely randomly.

Pair Corralation between Cortus Metals and Rambler Metals

Assuming the 90 days horizon Cortus Metals is expected to generate 7.76 times more return on investment than Rambler Metals. However, Cortus Metals is 7.76 times more volatile than Rambler Metals and. It trades about 0.04 of its potential returns per unit of risk. Rambler Metals and is currently generating about 0.02 per unit of risk. If you would invest  14.00  in Cortus Metals on October 11, 2024 and sell it today you would lose (6.81) from holding Cortus Metals or give up 48.64% of portfolio value over 90 days.

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

Cortus Metals  vs.  Rambler Metals and

Cortus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cortus Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cortus Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Rambler Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rambler Metals and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rambler Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cortus Metals and Rambler Metals

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

The idea behind Cortus Metals and Rambler Metals and 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.