Correlation Between Ferrexpo PLC and Alien Metals

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

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

Diversification Opportunities for Ferrexpo PLC and Alien Metals

0.71

Correlation Coefficient

Ferrexpo PLC  Alien Metals

Poor diversification

The 3 months correlation between Ferrexpo and Alien is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Alien Metals go up and down completely randomly.

Pair Corralation between Ferrexpo PLC and Alien Metals

Assuming the 90 days trading horizon Ferrexpo PLC is expected to under-perform the Alien Metals. In addition to that, Ferrexpo PLC is 2.07 times more volatile than Alien Metals. It trades about -0.07 of its total potential returns per unit of risk. Alien Metals is currently generating about -0.09 per unit of volatility. If you would invest  8.25  in Alien Metals on December 24, 2024 and sell it today you would lose (1.75) from holding Alien Metals or give up 21.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Ferrexpo PLC  vs.  Alien Metals

Ferrexpo PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferrexpo PLC 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alien Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alien Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

Pair Trading with Ferrexpo PLC and Alien Metals

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

The idea behind Ferrexpo PLC and Alien 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.