Correlation Between Sky Metals and DY6 Metals

Can any of the company-specific risk be diversified away by investing in both Sky Metals and DY6 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 Sky Metals and DY6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sky Metals and DY6 Metals, you can compare the effects of market volatilities on Sky Metals and DY6 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 Sky Metals with a short position of DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and DY6 Metals.

Diversification Opportunities for Sky Metals and DY6 Metals

0.24

Correlation Coefficient

Sky Metals  DY6 Metals

Modest diversification

The 3 months correlation between Sky and DY6 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 Metals and Sky 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 Sky Metals are associated (or correlated) with DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Sky Metals i.e., Sky Metals and DY6 Metals go up and down completely randomly.

Pair Corralation between Sky Metals and DY6 Metals

Assuming the 90 days trading horizon Sky Metals is expected to under-perform the DY6 Metals. In addition to that, Sky Metals is 2.08 times more volatile than DY6 Metals. It trades about -0.01 of its total potential returns per unit of risk. DY6 Metals is currently generating about 0.07 per unit of volatility. If you would invest  4.70  in DY6 Metals on September 16, 2024 and sell it today you would earn a total of  0.10  from holding DY6 Metals or generate 2.13% return on investment over 90 days.

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

Sky Metals  vs.  DY6 Metals

Sky Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sky Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sky Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

DY6 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DY6 Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sky Metals and DY6 Metals

The main advantage of trading using opposite Sky Metals and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, DY6 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.

The idea behind Sky Metals and DY6 Metals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.