Correlation Between Metal Sky and Globalink Investment

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

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

Diversification Opportunities for Metal Sky and Globalink Investment

0.46

Correlation Coefficient

Metal Sky  Globalink Investment

Very weak diversification

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

Pair Corralation between Metal Sky and Globalink Investment

Given the investment horizon of 90 days Metal Sky Star is expected to generate 1.27 times more return on investment than Globalink Investment. However, Metal Sky is 1.27 times more volatile than Globalink Investment. It trades about 0.05 of its potential returns per unit of risk. Globalink Investment is currently generating about 0.03 per unit of risk. If you would invest  1,021  in Metal Sky Star on October 27, 2024 and sell it today you would earn a total of  159.00  from holding Metal Sky Star or generate 15.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.76%
Values	Daily Returns

Metal Sky Star  vs.  Globalink Investment

Metal Sky Star

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Globalink Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globalink Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Metal Sky and Globalink Investment

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

The idea behind Metal Sky Star and Globalink Investment 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.