Correlation Between Europa Metals and Apax Global

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

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

Diversification Opportunities for Europa Metals and Apax Global

0.69

Correlation Coefficient

Europa Metals  Apax Global

Poor diversification

The 3 months correlation between Europa and Apax is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Apax Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apax Global Alpha and Europa 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 Europa Metals are associated (or correlated) with Apax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apax Global Alpha has no effect on the direction of Europa Metals i.e., Europa Metals and Apax Global go up and down completely randomly.

Pair Corralation between Europa Metals and Apax Global

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the Apax Global. In addition to that, Europa Metals is 4.95 times more volatile than Apax Global Alpha. It trades about -0.09 of its total potential returns per unit of risk. Apax Global Alpha is currently generating about -0.13 per unit of volatility. If you would invest  13,323  in Apax Global Alpha on December 30, 2024 and sell it today you would lose (1,423) from holding Apax Global Alpha or give up 10.68% of portfolio value over 90 days.

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

Europa Metals  vs.  Apax Global Alpha

Europa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europa Metals 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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Apax Global Alpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apax Global Alpha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Europa Metals and Apax Global

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

The idea behind Europa Metals and Apax Global Alpha 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.