Correlation Between De Grey and Metro Mining
Can any of the company-specific risk be diversified away by investing in both De Grey and Metro Mining 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 De Grey and Metro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Metro Mining, you can compare the effects of market volatilities on De Grey and Metro Mining 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 De Grey with a short position of Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Metro Mining.
Diversification Opportunities for De Grey and Metro Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEG and Metro is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and De Grey 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 De Grey Mining are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of De Grey i.e., De Grey and Metro Mining go up and down completely randomly.
Pair Corralation between De Grey and Metro Mining
Assuming the 90 days trading horizon De Grey Mining is expected to under-perform the Metro Mining. But the stock apears to be less risky and, when comparing its historical volatility, De Grey Mining is 1.33 times less risky than Metro Mining. The stock trades about -0.14 of its potential returns per unit of risk. The Metro Mining is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 6.30 in Metro Mining on October 9, 2024 and sell it today you would lose (0.30) from holding Metro Mining or give up 4.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
De Grey Mining vs. Metro Mining
Performance |
Timeline |
De Grey Mining |
Metro Mining |
De Grey and Metro Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with De Grey and Metro Mining
The main advantage of trading using opposite De Grey and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.De Grey vs. Ironbark Capital | De Grey vs. MetalsGrove Mining | De Grey vs. Phoslock Environmental Technologies | De Grey vs. Australian Unity Office |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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