Correlation Between East Africa and American CuMo
Can any of the company-specific risk be diversified away by investing in both East Africa and American CuMo 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 East Africa and American CuMo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and American CuMo Mining, you can compare the effects of market volatilities on East Africa and American CuMo 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 East Africa with a short position of American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and American CuMo.
Diversification Opportunities for East Africa and American CuMo
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between East and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining and East Africa 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 East Africa Metals are associated (or correlated) with American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of East Africa i.e., East Africa and American CuMo go up and down completely randomly.
Pair Corralation between East Africa and American CuMo
If you would invest 2.00 in American CuMo Mining on December 4, 2024 and sell it today you would lose (0.50) from holding American CuMo Mining or give up 25.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
East Africa Metals vs. American CuMo Mining
Performance |
Timeline |
East Africa Metals |
American CuMo Mining |
East Africa and American CuMo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with East Africa and American CuMo
The main advantage of trading using opposite East Africa and American CuMo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, American CuMo 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 American CuMo will offset losses from the drop in American CuMo's long position.East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
American CuMo vs. Pasinex Resources Limited | American CuMo vs. Themac Resources Group | American CuMo vs. East Africa Metals | American CuMo vs. Forsys Metals Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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