Correlation Between Future Metals and Grand Vision

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

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

Diversification Opportunities for Future Metals and Grand Vision

-0.33

Correlation Coefficient

Future Metals  Grand Vision

Very good diversification

The 3 months correlation between Future and Grand is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Grand Vision Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Vision Media and Future 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 Future Metals NL are associated (or correlated) with Grand Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Vision Media has no effect on the direction of Future Metals i.e., Future Metals and Grand Vision go up and down completely randomly.

Pair Corralation between Future Metals and Grand Vision

Assuming the 90 days trading horizon Future Metals NL is expected to generate 0.93 times more return on investment than Grand Vision. However, Future Metals NL is 1.08 times less risky than Grand Vision. It trades about 0.0 of its potential returns per unit of risk. Grand Vision Media is currently generating about -0.12 per unit of risk. If you would invest  88.00  in Future Metals NL on September 13, 2024 and sell it today you would lose (3.00) from holding Future Metals NL or give up 3.41% of portfolio value over 90 days.

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

Future Metals NL  vs.  Grand Vision Media

Future Metals NL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Metals NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Future Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grand Vision Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Vision Media 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Future Metals and Grand Vision

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

The idea behind Future Metals NL and Grand Vision Media 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 Transaction History module to view history of all your transactions and understand their impact on performance.