Correlation Between Metals Exploration and Tatton Asset

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

Diversification Opportunities for Metals Exploration and Tatton Asset

0.1

Correlation Coefficient

Metals Exploration  Tatton Asset

Average diversification

The 3 months correlation between Metals and Tatton is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Metals Exploration i.e., Metals Exploration and Tatton Asset go up and down completely randomly.

Pair Corralation between Metals Exploration and Tatton Asset

Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 1.63 times more return on investment than Tatton Asset. However, Metals Exploration is 1.63 times more volatile than Tatton Asset Management. It trades about 0.36 of its potential returns per unit of risk. Tatton Asset Management is currently generating about -0.02 per unit of risk. If you would invest  510.00  in Metals Exploration Plc on October 11, 2024 and sell it today you would earn a total of  95.00  from holding Metals Exploration Plc or generate 18.63% 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.  Tatton Asset Management

Metals Exploration Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Metals Exploration may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tatton Asset Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metals Exploration and Tatton Asset

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

The idea behind Metals Exploration Plc and Tatton Asset Management 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.