Correlation Between European Metals and South Star

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

Diversification Opportunities for European Metals and South Star

0.0

Correlation Coefficient

European Metals  South Star

Pay attention - limited upside

The 3 months correlation between European and South is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery 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 South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of European Metals i.e., European Metals and South Star go up and down completely randomly.

Pair Corralation between European Metals and South Star

If you would invest  35.00  in South Star Battery on December 1, 2024 and sell it today you would lose (1.00) from holding South Star Battery or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

European Metals Holdings  vs.  South Star Battery

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. Despite nearly stable basic indicators, European Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

South Star Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Star Battery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, South Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with European Metals and South Star

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

The idea behind European Metals Holdings and South Star Battery 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.