Correlation Between Panther Metals and Empire Metals

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

Diversification Opportunities for Panther Metals and Empire Metals

-0.75

Correlation Coefficient

Panther Metals  Empire Metals

Pay attention - limited upside

The 3 months correlation between Panther and Empire is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited 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 Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Panther Metals i.e., Panther Metals and Empire Metals go up and down completely randomly.

Pair Corralation between Panther Metals and Empire Metals

Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 13.3 times more return on investment than Empire Metals. However, Panther Metals is 13.3 times more volatile than Empire Metals Limited. It trades about 0.07 of its potential returns per unit of risk. Empire Metals Limited is currently generating about 0.07 per unit of risk. If you would invest  12,250  in Panther Metals PLC on October 5, 2024 and sell it today you would lose (3,750) from holding Panther Metals PLC or give up 30.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Panther Metals PLC  vs.  Empire Metals Limited

Panther Metals PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 5 (%) 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.

Empire Metals Limited

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Panther Metals and Empire Metals

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

The idea behind Panther Metals PLC and Empire Metals 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..