Correlation Between Radius Gold and Emergent Metals

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

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

Diversification Opportunities for Radius Gold and Emergent Metals

-0.15

Correlation Coefficient

Radius Gold  Emergent Metals

Good diversification

The 3 months correlation between Radius and Emergent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Radius Gold and Emergent Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Metals Corp and Radius Gold 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 Radius Gold are associated (or correlated) with Emergent Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Metals Corp has no effect on the direction of Radius Gold i.e., Radius Gold and Emergent Metals go up and down completely randomly.

Pair Corralation between Radius Gold and Emergent Metals

Assuming the 90 days horizon Radius Gold is expected to under-perform the Emergent Metals. But the stock apears to be less risky and, when comparing its historical volatility, Radius Gold is 1.72 times less risky than Emergent Metals. The stock trades about -0.14 of its potential returns per unit of risk. The Emergent Metals Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Emergent Metals Corp on September 7, 2024 and sell it today you would lose (2.50) from holding Emergent Metals Corp or give up 20.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Radius Gold  vs.  Emergent Metals Corp

Radius Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radius Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Radius Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Emergent Metals Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Metals Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Emergent Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radius Gold and Emergent Metals

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

The idea behind Radius Gold and Emergent Metals Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.