Correlation Between Metals Acquisition and Sound Point

Can any of the company-specific risk be diversified away by investing in both Metals Acquisition and Sound Point 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 Metals Acquisition and Sound Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metals Acquisition Limited and Sound Point Acquisition, you can compare the effects of market volatilities on Metals Acquisition and Sound Point 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 Metals Acquisition with a short position of Sound Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Acquisition and Sound Point.

Diversification Opportunities for Metals Acquisition and Sound Point

-0.24

Correlation Coefficient

Metals Acquisition  Sound Point

Very good diversification

The 3 months correlation between Metals and Sound is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Metals Acquisition Limited and Sound Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Point Acquisition and Metals Acquisition 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 Metals Acquisition Limited are associated (or correlated) with Sound Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Point Acquisition has no effect on the direction of Metals Acquisition i.e., Metals Acquisition and Sound Point go up and down completely randomly.

Pair Corralation between Metals Acquisition and Sound Point

If you would invest  1,159  in Metals Acquisition Limited on September 17, 2024 and sell it today you would earn a total of  61.00  from holding Metals Acquisition Limited or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Metals Acquisition Limited  vs.  Sound Point Acquisition

Metals Acquisition

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Metals Acquisition is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sound Point Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sound Point Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Sound Point 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 Metals Acquisition and Sound Point

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

The idea behind Metals Acquisition Limited and Sound Point 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..