Correlation Between Metal Sky and MOUNTAIN LAKE

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

Diversification Opportunities for Metal Sky and MOUNTAIN LAKE

0.58

Correlation Coefficient

Metal Sky  MOUNTAIN LAKE

Very weak diversification

The 3 months correlation between Metal and MOUNTAIN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Metal Sky Star and MOUNTAIN LAKE ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOUNTAIN LAKE 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 MOUNTAIN LAKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOUNTAIN LAKE ACQUISITION has no effect on the direction of Metal Sky i.e., Metal Sky and MOUNTAIN LAKE go up and down completely randomly.

Pair Corralation between Metal Sky and MOUNTAIN LAKE

If you would invest  0.80  in Metal Sky Star on October 7, 2024 and sell it today you would earn a total of  2.57  from holding Metal Sky Star or generate 321.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.39%
Values	Daily Returns

Metal Sky Star  vs.  MOUNTAIN LAKE ACQUISITION

Metal Sky Star

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Metal Sky showed solid returns over the last few months and may actually be approaching a breakup point.

MOUNTAIN LAKE ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metal Sky and MOUNTAIN LAKE

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

The idea behind Metal Sky Star and MOUNTAIN LAKE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.