Correlation Between Grid Metals and ERAMET SA

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

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

Diversification Opportunities for Grid Metals and ERAMET SA

-0.1

Correlation Coefficient

Grid Metals  ERAMET SA

Good diversification

The 3 months correlation between Grid and ERAMET is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and ERAMET SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERAMET SA and Grid 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 Grid Metals Corp are associated (or correlated) with ERAMET SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERAMET SA has no effect on the direction of Grid Metals i.e., Grid Metals and ERAMET SA go up and down completely randomly.

Pair Corralation between Grid Metals and ERAMET SA

Assuming the 90 days horizon Grid Metals Corp is expected to under-perform the ERAMET SA. In addition to that, Grid Metals is 1.28 times more volatile than ERAMET SA. It trades about -0.04 of its total potential returns per unit of risk. ERAMET SA is currently generating about 0.0 per unit of volatility. If you would invest  7,022  in ERAMET SA on September 3, 2024 and sell it today you would lose (1,570) from holding ERAMET SA or give up 22.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.12%
Values	Daily Returns

Grid Metals Corp  vs.  ERAMET SA

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ERAMET SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ERAMET SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grid Metals and ERAMET SA

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

The idea behind Grid Metals Corp and ERAMET SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.