Correlation Between DY6 Metals and Lykos Metals

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Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Lykos 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 DY6 Metals and Lykos Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DY6 Metals and Lykos Metals, you can compare the effects of market volatilities on DY6 Metals and Lykos 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 DY6 Metals with a short position of Lykos Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Lykos Metals.

Diversification Opportunities for DY6 Metals and Lykos Metals

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between DY6 and Lykos is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Lykos Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lykos Metals and DY6 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 DY6 Metals are associated (or correlated) with Lykos Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lykos Metals has no effect on the direction of DY6 Metals i.e., DY6 Metals and Lykos Metals go up and down completely randomly.

Pair Corralation between DY6 Metals and Lykos Metals

Assuming the 90 days trading horizon DY6 Metals is expected to generate 0.72 times more return on investment than Lykos Metals. However, DY6 Metals is 1.39 times less risky than Lykos Metals. It trades about -0.19 of its potential returns per unit of risk. Lykos Metals is currently generating about -0.22 per unit of risk. If you would invest  5.50  in DY6 Metals on October 6, 2024 and sell it today you would lose (1.40) from holding DY6 Metals or give up 25.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

DY6 Metals  vs.  Lykos Metals

 Performance 
       Timeline  
DY6 Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Lykos Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lykos Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DY6 Metals and Lykos Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DY6 Metals and Lykos Metals

The main advantage of trading using opposite DY6 Metals and Lykos Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Lykos 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 Lykos Metals will offset losses from the drop in Lykos Metals' long position.
The idea behind DY6 Metals and Lykos Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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