Correlation Between Metals Exploration and SoftBank Group

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

By analyzing existing cross correlation between Metals Exploration Plc and SoftBank Group Corp, you can compare the effects of market volatilities on Metals Exploration and SoftBank Group 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 Exploration with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and SoftBank Group.

Diversification Opportunities for Metals Exploration and SoftBank Group

0.14

Correlation Coefficient

Metals Exploration  SoftBank Group

Average diversification

The 3 months correlation between Metals and SoftBank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Metals Exploration 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 Exploration Plc are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Metals Exploration i.e., Metals Exploration and SoftBank Group go up and down completely randomly.

Pair Corralation between Metals Exploration and SoftBank Group

Assuming the 90 days trading horizon Metals Exploration Plc is expected to under-perform the SoftBank Group. In addition to that, Metals Exploration is 1.87 times more volatile than SoftBank Group Corp. It trades about -0.04 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.19 per unit of volatility. If you would invest  892,000  in SoftBank Group Corp on September 16, 2024 and sell it today you would earn a total of  40,900  from holding SoftBank Group Corp or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.64%
Values	Daily Returns

Metals Exploration Plc  vs.  SoftBank Group Corp

Metals Exploration Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals Exploration Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Metals Exploration is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SoftBank Group Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SoftBank Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals Exploration and SoftBank Group

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

The idea behind Metals Exploration Plc and SoftBank Group 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.