Correlation Between Metals X and Neurotech International

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

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

Diversification Opportunities for Metals X and Neurotech International

-0.46

Correlation Coefficient

Metals X  Neurotech International

Very good diversification

The 3 months correlation between Metals and Neurotech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metals X and Neurotech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neurotech International and Metals X 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 Metals X are associated (or correlated) with Neurotech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neurotech International has no effect on the direction of Metals X i.e., Metals X and Neurotech International go up and down completely randomly.

Pair Corralation between Metals X and Neurotech International

Assuming the 90 days trading horizon Metals X is expected to generate 1.26 times more return on investment than Neurotech International. However, Metals X is 1.26 times more volatile than Neurotech International. It trades about 0.11 of its potential returns per unit of risk. Neurotech International is currently generating about -0.09 per unit of risk. If you would invest  42.00  in Metals X on October 12, 2024 and sell it today you would earn a total of  2.00  from holding Metals X or generate 4.76% return on investment over 90 days.

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

Metals X  vs.  Neurotech International

Metals X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metals X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Neurotech International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neurotech International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Neurotech International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals X and Neurotech International

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

The idea behind Metals X and Neurotech International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.