Correlation Between Empire Metals and Gaztransport

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

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

Diversification Opportunities for Empire Metals and Gaztransport

-0.76

Correlation Coefficient

Empire Metals  Gaztransport

Pay attention - limited upside

The 3 months correlation between Empire and Gaztransport is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and Empire 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 Empire Metals Limited are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Empire Metals i.e., Empire Metals and Gaztransport go up and down completely randomly.

Pair Corralation between Empire Metals and Gaztransport

Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 3.84 times more return on investment than Gaztransport. However, Empire Metals is 3.84 times more volatile than Gaztransport et Technigaz. It trades about 0.07 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about -0.09 per unit of risk. If you would invest  625.00  in Empire Metals Limited on September 17, 2024 and sell it today you would earn a total of  25.00  from holding Empire Metals Limited or generate 4.0% return on investment over 90 days.

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

Empire Metals Limited  vs.  Gaztransport et Technigaz

Empire Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gaztransport et Technigaz

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gaztransport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Empire Metals and Gaztransport

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

The idea behind Empire Metals Limited and Gaztransport et Technigaz 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.