Correlation Between PM Capital and Metro Mining

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

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

Diversification Opportunities for PM Capital and Metro Mining

-0.14

Correlation Coefficient

PM Capital  Metro Mining

Good diversification

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

Pair Corralation between PM Capital and Metro Mining

Assuming the 90 days trading horizon PM Capital Global is expected to generate 0.48 times more return on investment than Metro Mining. However, PM Capital Global is 2.07 times less risky than Metro Mining. It trades about 0.09 of its potential returns per unit of risk. Metro Mining is currently generating about -0.09 per unit of risk. If you would invest  230.00  in PM Capital Global on December 3, 2024 and sell it today you would earn a total of  17.00  from holding PM Capital Global or generate 7.39% return on investment over 90 days.

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

PM Capital Global  vs.  Metro Mining

PM Capital Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PM Capital Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, PM Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Metro Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metro Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PM Capital and Metro Mining

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

The idea behind PM Capital Global and Metro Mining 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 Anywhere module to track or share privately all of your investments from the convenience of any device.