Correlation Between Metalink and Rail Vision

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

By analyzing existing cross correlation between Metalink and Rail Vision Ltd, you can compare the effects of market volatilities on Metalink and Rail Vision 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 Metalink with a short position of Rail Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalink and Rail Vision.

Diversification Opportunities for Metalink and Rail Vision

0.14

Correlation Coefficient

Metalink  Rail Vision

Average diversification

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

Pair Corralation between Metalink and Rail Vision

Given the investment horizon of 90 days Metalink is expected to generate 3.26 times more return on investment than Rail Vision. However, Metalink is 3.26 times more volatile than Rail Vision Ltd. It trades about 0.04 of its potential returns per unit of risk. Rail Vision Ltd is currently generating about 0.02 per unit of risk. If you would invest  56.00  in Metalink on October 3, 2024 and sell it today you would lose (13.00) from holding Metalink or give up 23.21% of portfolio value over 90 days.

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

Metalink  vs.  Rail Vision Ltd

Metalink

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalink are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Metalink is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Rail Vision

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rail Vision Ltd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rail Vision displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalink and Rail Vision

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

The idea behind Metalink and Rail Vision Ltd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.