Correlation Between Falcon Metals and SEVEN GROUP

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

By analyzing existing cross correlation between Falcon Metals and SEVEN GROUP HOLDINGS, you can compare the effects of market volatilities on Falcon Metals and SEVEN GROUP 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 SEVEN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and SEVEN GROUP.

Diversification Opportunities for Falcon Metals and SEVEN GROUP

-0.54

Correlation Coefficient

Falcon Metals  SEVEN GROUP

Excellent diversification

The 3 months correlation between Falcon and SEVEN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and SEVEN GROUP HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEVEN GROUP HOLDINGS 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 SEVEN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEVEN GROUP HOLDINGS has no effect on the direction of Falcon Metals i.e., Falcon Metals and SEVEN GROUP go up and down completely randomly.

Pair Corralation between Falcon Metals and SEVEN GROUP

Assuming the 90 days trading horizon Falcon Metals is expected to generate 4.66 times more return on investment than SEVEN GROUP. However, Falcon Metals is 4.66 times more volatile than SEVEN GROUP HOLDINGS. It trades about 0.04 of its potential returns per unit of risk. SEVEN GROUP HOLDINGS is currently generating about 0.06 per unit of risk. If you would invest  14.00  in Falcon Metals on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Falcon Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.89%
Values	Daily Returns

Falcon Metals  vs.  SEVEN GROUP HOLDINGS

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 latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SEVEN GROUP HOLDINGS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEVEN GROUP HOLDINGS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEVEN GROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Falcon Metals and SEVEN GROUP

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

The idea behind Falcon Metals and SEVEN GROUP HOLDINGS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.