Correlation Between Emetals and Sandon Capital

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

By analyzing existing cross correlation between Emetals and Sandon Capital Investments, you can compare the effects of market volatilities on Emetals and Sandon Capital 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 Emetals with a short position of Sandon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emetals and Sandon Capital.

Diversification Opportunities for Emetals and Sandon Capital

-0.24

Correlation Coefficient

Emetals  Sandon Capital

Very good diversification

The 3 months correlation between Emetals and Sandon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Emetals and Sandon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandon Capital Inves and Emetals 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 Emetals are associated (or correlated) with Sandon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandon Capital Inves has no effect on the direction of Emetals i.e., Emetals and Sandon Capital go up and down completely randomly.

Pair Corralation between Emetals and Sandon Capital

Assuming the 90 days trading horizon Emetals is expected to generate 2.2 times less return on investment than Sandon Capital. In addition to that, Emetals is 3.26 times more volatile than Sandon Capital Investments. It trades about 0.01 of its total potential returns per unit of risk. Sandon Capital Investments is currently generating about 0.04 per unit of volatility. If you would invest  56.00  in Sandon Capital Investments on September 24, 2024 and sell it today you would earn a total of  21.00  from holding Sandon Capital Investments or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Emetals  vs.  Sandon Capital Investments

Emetals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emetals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Emetals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sandon Capital Inves

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandon Capital Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Sandon Capital 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 Emetals and Sandon Capital

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

The idea behind Emetals and Sandon Capital Investments 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.