Correlation Between Ramp Metals and IMetal Resources

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

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

Diversification Opportunities for Ramp Metals and IMetal Resources

-0.1

Correlation Coefficient

Ramp Metals  IMetal Resources

Good diversification

The 3 months correlation between Ramp and IMetal is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ramp Metals and iMetal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMetal Resources and Ramp 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 Ramp Metals are associated (or correlated) with IMetal Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMetal Resources has no effect on the direction of Ramp Metals i.e., Ramp Metals and IMetal Resources go up and down completely randomly.

Pair Corralation between Ramp Metals and IMetal Resources

Assuming the 90 days trading horizon Ramp Metals is expected to generate 1.45 times more return on investment than IMetal Resources. However, Ramp Metals is 1.45 times more volatile than iMetal Resources. It trades about 0.08 of its potential returns per unit of risk. iMetal Resources is currently generating about 0.0 per unit of risk. If you would invest  19.00  in Ramp Metals on December 4, 2024 and sell it today you would earn a total of  90.00  from holding Ramp Metals or generate 473.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.41%
Values	Daily Returns

Ramp Metals  vs.  iMetal Resources

Ramp Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ramp Metals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Ramp Metals showed solid returns over the last few months and may actually be approaching a breakup point.

iMetal Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iMetal Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, IMetal Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramp Metals and IMetal Resources

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

The idea behind Ramp Metals and iMetal Resources 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.