Correlation Between Dalaroo Metals and Sims

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

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

Diversification Opportunities for Dalaroo Metals and Sims

0.26

Correlation Coefficient

Dalaroo Metals  Sims

Modest diversification

The 3 months correlation between Dalaroo and Sims is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dalaroo Metals and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims and Dalaroo 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 Dalaroo Metals are associated (or correlated) with Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Dalaroo Metals i.e., Dalaroo Metals and Sims go up and down completely randomly.

Pair Corralation between Dalaroo Metals and Sims

Assuming the 90 days trading horizon Dalaroo Metals is expected to generate 3.42 times less return on investment than Sims. In addition to that, Dalaroo Metals is 2.88 times more volatile than Sims. It trades about 0.02 of its total potential returns per unit of risk. Sims is currently generating about 0.24 per unit of volatility. If you would invest  1,187  in Sims on December 28, 2024 and sell it today you would earn a total of  330.00  from holding Sims or generate 27.8% return on investment over 90 days.

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

Dalaroo Metals  vs.  Sims

Dalaroo Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dalaroo Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Dalaroo Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sims

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalaroo Metals and Sims

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

The idea behind Dalaroo Metals and Sims 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.