Correlation Between Metal Sky and Healthcare

Can any of the company-specific risk be diversified away by investing in both Metal Sky and Healthcare 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 Healthcare 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 Healthcare AI Acquisition, you can compare the effects of market volatilities on Metal Sky and Healthcare 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 Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metal Sky and Healthcare.

Diversification Opportunities for Metal Sky and Healthcare

-0.13

Correlation Coefficient

Metal Sky  Healthcare

Good diversification

The 3 months correlation between Metal and Healthcare is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Metal Sky Star and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of Metal Sky i.e., Metal Sky and Healthcare go up and down completely randomly.

Pair Corralation between Metal Sky and Healthcare

Given the investment horizon of 90 days Metal Sky Star is expected to generate 1.1 times more return on investment than Healthcare. However, Metal Sky is 1.1 times more volatile than Healthcare AI Acquisition. It trades about 0.08 of its potential returns per unit of risk. Healthcare AI Acquisition is currently generating about -0.06 per unit of risk. If you would invest  1,137  in Metal Sky Star on September 14, 2024 and sell it today you would earn a total of  51.00  from holding Metal Sky Star or generate 4.49% return on investment over 90 days.

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

Metal Sky Star  vs.  Healthcare AI Acquisition

Metal Sky Star

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 6 (%) 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.

Healthcare AI Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metal Sky and Healthcare

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

The idea behind Metal Sky Star and Healthcare AI Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.