Correlation Between Metal Sky and Mars Acquisition

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

Diversification Opportunities for Metal Sky and Mars Acquisition

0.47

Correlation Coefficient

Metal Sky  Mars Acquisition

Very weak diversification

The 3 months correlation between Metal and Mars is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Metal Sky Star and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Metal Sky i.e., Metal Sky and Mars Acquisition go up and down completely randomly.

Pair Corralation between Metal Sky and Mars Acquisition

Assuming the 90 days horizon Metal Sky Star is expected to generate 4.28 times more return on investment than Mars Acquisition. However, Metal Sky is 4.28 times more volatile than Mars Acquisition Corp. It trades about 0.18 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.29 per unit of risk. If you would invest  1.00  in Metal Sky Star on October 24, 2024 and sell it today you would earn a total of  1.94  from holding Metal Sky Star or generate 194.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.04%
Values	Daily Returns

Metal Sky Star  vs.  Mars Acquisition Corp

Metal Sky Star

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metal Sky showed solid returns over the last few months and may actually be approaching a breakup point.

Mars Acquisition Corp

Risk-Adjusted Performance

0 of 100

Solid

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

Pair Trading with Metal Sky and Mars Acquisition

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

The idea behind Metal Sky Star and Mars Acquisition Corp 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.