Correlation Between Metal Sky and Technology Telecommunicatio

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

Diversification Opportunities for Metal Sky and Technology Telecommunicatio

0.04

Correlation Coefficient

Metal Sky  Technology Telecommunicatio

Significant diversification

The 3 months correlation between Metal and Technology is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Metal Sky Star and Technology Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Telecommunicatio 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 Technology Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Telecommunicatio has no effect on the direction of Metal Sky i.e., Metal Sky and Technology Telecommunicatio go up and down completely randomly.

Pair Corralation between Metal Sky and Technology Telecommunicatio

Given the investment horizon of 90 days Metal Sky Star is expected to generate 0.55 times more return on investment than Technology Telecommunicatio. However, Metal Sky Star is 1.82 times less risky than Technology Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Technology Telecommunication is currently generating about -0.02 per unit of risk. If you would invest  1,214  in Metal Sky Star on December 28, 2024 and sell it today you would earn a total of  21.00  from holding Metal Sky Star or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Metal Sky Star  vs.  Technology Telecommunication

Metal Sky Star

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 2 (%) 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.

Technology Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Technology Telecommunicatio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metal Sky and Technology Telecommunicatio

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

The idea behind Metal Sky Star and Technology Telecommunication 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.