Correlation Between Mountain Crest and Metal Sky

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Can any of the company-specific risk be diversified away by investing in both Mountain Crest and Metal Sky 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 Mountain Crest and Metal Sky into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mountain Crest Acquisition and Metal Sky Star, you can compare the effects of market volatilities on Mountain Crest and Metal Sky 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 Mountain Crest with a short position of Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mountain Crest and Metal Sky.

Diversification Opportunities for Mountain Crest and Metal Sky

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Mountain and Metal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Crest Acquisition and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star and Mountain Crest 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 Mountain Crest Acquisition are associated (or correlated) with Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Mountain Crest i.e., Mountain Crest and Metal Sky go up and down completely randomly.

Pair Corralation between Mountain Crest and Metal Sky

Given the investment horizon of 90 days Mountain Crest Acquisition is expected to under-perform the Metal Sky. But the stock apears to be less risky and, when comparing its historical volatility, Mountain Crest Acquisition is 1.16 times less risky than Metal Sky. The stock trades about -0.11 of its potential returns per unit of risk. The Metal Sky Star is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,139  in Metal Sky Star on September 16, 2024 and sell it today you would earn a total of  40.00  from holding Metal Sky Star or generate 3.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy75.38%
ValuesDaily Returns

Mountain Crest Acquisition  vs.  Metal Sky Star

 Performance 
       Timeline  
Mountain Crest Acqui 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mountain Crest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Metal Sky Star 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Metal Sky is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mountain Crest and Metal Sky Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mountain Crest and Metal Sky

The main advantage of trading using opposite Mountain Crest and Metal Sky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mountain Crest position performs unexpectedly, Metal Sky 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 Metal Sky will offset losses from the drop in Metal Sky's long position.
The idea behind Mountain Crest Acquisition and Metal Sky Star 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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