Correlation Between Metals Exploration and Supermarket Income

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

Diversification Opportunities for Metals Exploration and Supermarket Income

0.02

Correlation Coefficient

Metals Exploration  Supermarket Income

Significant diversification

The 3 months correlation between Metals and Supermarket is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Metals Exploration i.e., Metals Exploration and Supermarket Income go up and down completely randomly.

Pair Corralation between Metals Exploration and Supermarket Income

Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 2.38 times more return on investment than Supermarket Income. However, Metals Exploration is 2.38 times more volatile than Supermarket Income REIT. It trades about 0.08 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.03 per unit of risk. If you would invest  163.00  in Metals Exploration Plc on October 23, 2024 and sell it today you would earn a total of  397.00  from holding Metals Exploration Plc or generate 243.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Metals Exploration Plc  vs.  Supermarket Income REIT

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.

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Supermarket Income 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 Exploration and Supermarket Income

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

The idea behind Metals Exploration Plc and Supermarket Income REIT 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 Valuation module to check real value of public entities based on technical and fundamental data.