Correlation Between MetalsGrove Mining and Cochlear

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

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

Diversification Opportunities for MetalsGrove Mining and Cochlear

-0.51

Correlation Coefficient

MetalsGrove Mining  Cochlear

Excellent diversification

The 3 months correlation between MetalsGrove and Cochlear is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MetalsGrove Mining and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear and MetalsGrove Mining 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 MetalsGrove Mining are associated (or correlated) with Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of MetalsGrove Mining i.e., MetalsGrove Mining and Cochlear go up and down completely randomly.

Pair Corralation between MetalsGrove Mining and Cochlear

Assuming the 90 days trading horizon MetalsGrove Mining is expected to generate 1.45 times more return on investment than Cochlear. However, MetalsGrove Mining is 1.45 times more volatile than Cochlear. It trades about 0.03 of its potential returns per unit of risk. Cochlear is currently generating about -0.06 per unit of risk. If you would invest  5.30  in MetalsGrove Mining on December 25, 2024 and sell it today you would earn a total of  0.20  from holding MetalsGrove Mining or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

MetalsGrove Mining  vs.  Cochlear

MetalsGrove Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetalsGrove Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MetalsGrove Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cochlear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cochlear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MetalsGrove Mining and Cochlear

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

The idea behind MetalsGrove Mining and Cochlear 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.