Correlation Between Horseshoe Metals and Metals X

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

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

Diversification Opportunities for Horseshoe Metals and Metals X

0.53

Correlation Coefficient

Horseshoe Metals  Metals X

Very weak diversification

The 3 months correlation between Horseshoe and Metals is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Horseshoe Metals and Metals X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X and Horseshoe 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 Horseshoe Metals are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X has no effect on the direction of Horseshoe Metals i.e., Horseshoe Metals and Metals X go up and down completely randomly.

Pair Corralation between Horseshoe Metals and Metals X

Assuming the 90 days trading horizon Horseshoe Metals is expected to generate 2.15 times less return on investment than Metals X. In addition to that, Horseshoe Metals is 1.8 times more volatile than Metals X. It trades about 0.07 of its total potential returns per unit of risk. Metals X is currently generating about 0.26 per unit of volatility. If you would invest  40.00  in Metals X on December 24, 2024 and sell it today you would earn a total of  32.00  from holding Metals X or generate 80.0% return on investment over 90 days.

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

Horseshoe Metals  vs.  Metals X

Horseshoe Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horseshoe Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Horseshoe Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Metals X

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metals X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horseshoe Metals and Metals X

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

The idea behind Horseshoe Metals and Metals X 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 CEOs Directory module to screen CEOs from public companies around the world.