Correlation Between Panther Metals and Capital Metals

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

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

Diversification Opportunities for Panther Metals and Capital Metals

-0.54

Correlation Coefficient

Panther Metals  Capital Metals

Excellent diversification

The 3 months correlation between Panther and Capital is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Panther Metals 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 Panther Metals PLC are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Panther Metals i.e., Panther Metals and Capital Metals go up and down completely randomly.

Pair Corralation between Panther Metals and Capital Metals

Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 0.89 times more return on investment than Capital Metals. However, Panther Metals PLC is 1.12 times less risky than Capital Metals. It trades about 0.09 of its potential returns per unit of risk. Capital Metals PLC is currently generating about -0.01 per unit of risk. If you would invest  7,500  in Panther Metals PLC on October 10, 2024 and sell it today you would earn a total of  1,500  from holding Panther Metals PLC or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Panther Metals PLC  vs.  Capital Metals PLC

Panther Metals PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panther Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Metals 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 Panther Metals and Capital Metals

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

The idea behind Panther Metals PLC and Capital Metals PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.