Correlation Between European Metals and METALL ZUG

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

By analyzing existing cross correlation between European Metals Holdings and METALL ZUG AG, you can compare the effects of market volatilities on European Metals and METALL ZUG 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 European Metals with a short position of METALL ZUG. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and METALL ZUG.

Diversification Opportunities for European Metals and METALL ZUG

-0.16

Correlation Coefficient

European Metals  METALL ZUG

Good diversification

The 3 months correlation between European and METALL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and METALL ZUG AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALL ZUG AG and European 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 European Metals Holdings are associated (or correlated) with METALL ZUG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALL ZUG AG has no effect on the direction of European Metals i.e., European Metals and METALL ZUG go up and down completely randomly.

Pair Corralation between European Metals and METALL ZUG

Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the METALL ZUG. In addition to that, European Metals is 3.15 times more volatile than METALL ZUG AG. It trades about -0.44 of its total potential returns per unit of risk. METALL ZUG AG is currently generating about 0.06 per unit of volatility. If you would invest  105,500  in METALL ZUG AG on December 4, 2024 and sell it today you would earn a total of  1,000.00  from holding METALL ZUG AG or generate 0.95% return on investment over 90 days.

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

European Metals Holdings  vs.  METALL ZUG AG

European Metals Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days European Metals Holdings 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

METALL ZUG AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days METALL ZUG AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METALL ZUG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with European Metals and METALL ZUG

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

The idea behind European Metals Holdings and METALL ZUG AG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.