Correlation Between European Metals and Tracsis Plc

Can any of the company-specific risk be diversified away by investing in both European Metals and Tracsis Plc 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 Tracsis Plc 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 Tracsis Plc, you can compare the effects of market volatilities on European Metals and Tracsis Plc 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 Tracsis Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Tracsis Plc.

Diversification Opportunities for European Metals and Tracsis Plc

0.09

Correlation Coefficient

European Metals  Tracsis Plc

Significant diversification

The 3 months correlation between European and Tracsis is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Tracsis Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tracsis Plc 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 Tracsis Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tracsis Plc has no effect on the direction of European Metals i.e., European Metals and Tracsis Plc go up and down completely randomly.

Pair Corralation between European Metals and Tracsis Plc

Assuming the 90 days trading horizon European Metals Holdings is expected to generate 0.86 times more return on investment than Tracsis Plc. However, European Metals Holdings is 1.17 times less risky than Tracsis Plc. It trades about -0.04 of its potential returns per unit of risk. Tracsis Plc is currently generating about -0.07 per unit of risk. If you would invest  850.00  in European Metals Holdings on October 25, 2024 and sell it today you would lose (75.00) from holding European Metals Holdings or give up 8.82% of portfolio value over 90 days.

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

European Metals Holdings  vs.  Tracsis Plc

European Metals Holdings

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Tracsis Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tracsis Plc 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.

Pair Trading with European Metals and Tracsis Plc

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

The idea behind European Metals Holdings and Tracsis Plc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.