Correlation Between European Metals and Zinc Media

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

Diversification Opportunities for European Metals and Zinc Media

0.51

Correlation Coefficient

European Metals  Zinc Media

Very weak diversification

The 3 months correlation between European and Zinc is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Zinc Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc Media Group 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 Zinc Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc Media Group has no effect on the direction of European Metals i.e., European Metals and Zinc Media go up and down completely randomly.

Pair Corralation between European Metals and Zinc Media

Assuming the 90 days trading horizon European Metals Holdings is expected to generate 1.4 times more return on investment than Zinc Media. However, European Metals is 1.4 times more volatile than Zinc Media Group. It trades about -0.09 of its potential returns per unit of risk. Zinc Media Group is currently generating about -0.18 per unit of risk. If you would invest  1,025  in European Metals Holdings on September 2, 2024 and sell it today you would lose (242.00) from holding European Metals Holdings or give up 23.61% of portfolio value over 90 days.

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

European Metals Holdings  vs.  Zinc Media Group

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 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Zinc Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc Media Group 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with European Metals and Zinc Media

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

The idea behind European Metals Holdings and Zinc Media Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.