Correlation Between Metal Sky and MYR

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

Diversification Opportunities for Metal Sky and MYR

-0.57

Correlation Coefficient

Metal Sky  MYR

Excellent diversification

The 3 months correlation between Metal and MYR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Metal Sky Star and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group 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 MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of Metal Sky i.e., Metal Sky and MYR go up and down completely randomly.

Pair Corralation between Metal Sky and MYR

Assuming the 90 days horizon Metal Sky Star is expected to generate 5.22 times more return on investment than MYR. However, Metal Sky is 5.22 times more volatile than MYR Group. It trades about 0.19 of its potential returns per unit of risk. MYR Group is currently generating about -0.07 per unit of risk. If you would invest  5.01  in Metal Sky Star on December 24, 2024 and sell it today you would earn a total of  3.30  from holding Metal Sky Star or generate 65.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.62%
Values	Daily Returns

Metal Sky Star  vs.  MYR Group

Metal Sky Star

Risk-Adjusted Performance

Good

Over the last 90 days Metal Sky Star has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain basic indicators, Metal Sky reported solid returns over the last few months and may actually be approaching a breakup point.

MYR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MYR Group 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Metal Sky and MYR

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

The idea behind Metal Sky Star and MYR Group 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.