Correlation Between NGEx Minerals and Metals X

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

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

Diversification Opportunities for NGEx Minerals and Metals X

-0.07

Correlation Coefficient

NGEx Minerals  Metals X

Good diversification

The 3 months correlation between NGEx and Metals is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding NGEx Minerals and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and NGEx Minerals 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 NGEx Minerals are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of NGEx Minerals i.e., NGEx Minerals and Metals X go up and down completely randomly.

Pair Corralation between NGEx Minerals and Metals X

Assuming the 90 days horizon NGEx Minerals is expected to generate 15.36 times less return on investment than Metals X. But when comparing it to its historical volatility, NGEx Minerals is 2.93 times less risky than Metals X. It trades about 0.03 of its potential returns per unit of risk. Metals X Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Metals X Limited on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Metals X Limited or generate 78.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

NGEx Minerals  vs.  Metals X Limited

NGEx Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NGEx Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Metals X Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NGEx Minerals and Metals X

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

The idea behind NGEx Minerals and Metals X Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.