Correlation Between Rambler Metals and Summit Environmental

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

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

Diversification Opportunities for Rambler Metals and Summit Environmental

1.0

Correlation Coefficient

Rambler Metals  Summit Environmental

No risk reduction

The 3 months correlation between Rambler and Summit is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Rambler Metals and and Summit Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Environmental and Rambler 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 Rambler Metals and are associated (or correlated) with Summit Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Environmental has no effect on the direction of Rambler Metals i.e., Rambler Metals and Summit Environmental go up and down completely randomly.

Pair Corralation between Rambler Metals and Summit Environmental

If you would invest  0.01  in Summit Environmental on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Summit Environmental or generate 0.0% return on investment over 90 days.

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

Rambler Metals and  vs.  Summit Environmental

Rambler Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rambler Metals and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rambler Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Summit Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Environmental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rambler Metals and Summit Environmental

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

The idea behind Rambler Metals and and Summit Environmental 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.