Correlation Between Euro Manganese and Namibia Critical

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

By analyzing existing cross correlation between Euro Manganese and Namibia Critical Metals, you can compare the effects of market volatilities on Euro Manganese and Namibia Critical 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 Euro Manganese with a short position of Namibia Critical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Namibia Critical.

Diversification Opportunities for Euro Manganese and Namibia Critical

0.14

Correlation Coefficient

Euro Manganese  Namibia Critical

Average diversification

The 3 months correlation between Euro and Namibia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Namibia Critical Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namibia Critical Metals and Euro Manganese 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 Euro Manganese are associated (or correlated) with Namibia Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namibia Critical Metals has no effect on the direction of Euro Manganese i.e., Euro Manganese and Namibia Critical go up and down completely randomly.

Pair Corralation between Euro Manganese and Namibia Critical

Assuming the 90 days horizon Euro Manganese is expected to under-perform the Namibia Critical. But the otc stock apears to be less risky and, when comparing its historical volatility, Euro Manganese is 1.06 times less risky than Namibia Critical. The otc stock trades about -0.01 of its potential returns per unit of risk. The Namibia Critical Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3.10  in Namibia Critical Metals on September 3, 2024 and sell it today you would lose (1.10) from holding Namibia Critical Metals or give up 35.48% of portfolio value over 90 days.

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

Euro Manganese  vs.  Namibia Critical Metals

Euro Manganese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Manganese has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Namibia Critical Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Euro Manganese and Namibia Critical

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

The idea behind Euro Manganese and Namibia Critical Metals 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.