Correlation Between Defense Metals and Solid Impact

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

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

Diversification Opportunities for Defense Metals and Solid Impact

0.0

Correlation Coefficient

Defense Metals  Solid Impact

Pay attention - limited upside

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

Pair Corralation between Defense Metals and Solid Impact

If you would invest  10.00  in Defense Metals Corp on September 25, 2024 and sell it today you would earn a total of  6.00  from holding Defense Metals Corp or generate 60.0% return on investment over 90 days.

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

Defense Metals Corp  vs.  Solid Impact Investments

Defense Metals Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Defense Metals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Defense Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Solid Impact Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Defense Metals and Solid Impact

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

The idea behind Defense Metals Corp and Solid Impact Investments 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.