Correlation Between Falcon Metals and Metro Mining

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

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

Diversification Opportunities for Falcon Metals and Metro Mining

-0.58

Correlation Coefficient

Falcon Metals  Metro Mining

Excellent diversification

The 3 months correlation between Falcon and Metro is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and Falcon 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 Falcon Metals are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Falcon Metals i.e., Falcon Metals and Metro Mining go up and down completely randomly.

Pair Corralation between Falcon Metals and Metro Mining

Assuming the 90 days trading horizon Falcon Metals is expected to generate 1.32 times less return on investment than Metro Mining. In addition to that, Falcon Metals is 1.81 times more volatile than Metro Mining. It trades about 0.03 of its total potential returns per unit of risk. Metro Mining is currently generating about 0.06 per unit of volatility. If you would invest  4.30  in Metro Mining on October 9, 2024 and sell it today you would earn a total of  1.60  from holding Metro Mining or generate 37.21% return on investment over 90 days.

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

Falcon Metals  vs.  Metro Mining

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Metro Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Metro Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcon Metals and Metro Mining

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

The idea behind Falcon Metals and Metro Mining 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.