Correlation Between Palantir Technologies and Metalfrio Solutions

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

By analyzing existing cross correlation between Palantir Technologies and Metalfrio Solutions SA, you can compare the effects of market volatilities on Palantir Technologies and Metalfrio Solutions 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 Palantir Technologies with a short position of Metalfrio Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Metalfrio Solutions.

Diversification Opportunities for Palantir Technologies and Metalfrio Solutions

0.59

Correlation Coefficient

Palantir Technologies  Metalfrio Solutions

Very weak diversification

The 3 months correlation between Palantir and Metalfrio is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Metalfrio Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalfrio Solutions and Palantir Technologies 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 Palantir Technologies are associated (or correlated) with Metalfrio Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalfrio Solutions has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Metalfrio Solutions go up and down completely randomly.

Pair Corralation between Palantir Technologies and Metalfrio Solutions

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 0.51 times more return on investment than Metalfrio Solutions. However, Palantir Technologies is 1.97 times less risky than Metalfrio Solutions. It trades about 0.21 of its potential returns per unit of risk. Metalfrio Solutions SA is currently generating about 0.04 per unit of risk. If you would invest  2,779  in Palantir Technologies on October 2, 2024 and sell it today you would earn a total of  13,268  from holding Palantir Technologies or generate 477.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.13%
Values	Daily Returns

Palantir Technologies  vs.  Metalfrio Solutions SA

Palantir Technologies

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Palantir Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Metalfrio Solutions

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metalfrio Solutions SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metalfrio Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and Metalfrio Solutions

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

The idea behind Palantir Technologies and Metalfrio Solutions SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.