Correlation Between Diamcor Mining and Metalla Royalty

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

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

Diversification Opportunities for Diamcor Mining and Metalla Royalty

0.11

Correlation Coefficient

Diamcor Mining  Metalla Royalty

Average diversification

The 3 months correlation between Diamcor and Metalla is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Diamcor Mining and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and Diamcor Mining 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 Diamcor Mining are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of Diamcor Mining i.e., Diamcor Mining and Metalla Royalty go up and down completely randomly.

Pair Corralation between Diamcor Mining and Metalla Royalty

Assuming the 90 days horizon Diamcor Mining is expected to generate 5.2 times more return on investment than Metalla Royalty. However, Diamcor Mining is 5.2 times more volatile than Metalla Royalty Streaming. It trades about 0.0 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.02 per unit of risk. If you would invest  2.00  in Diamcor Mining on November 28, 2024 and sell it today you would lose (1.00) from holding Diamcor Mining or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Diamcor Mining  vs.  Metalla Royalty Streaming

Diamcor Mining

Risk-Adjusted Performance

Very Weak

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

Metalla Royalty Streaming

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Diamcor Mining and Metalla Royalty

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

The idea behind Diamcor Mining and Metalla Royalty Streaming 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.