Correlation Between Strategic Metals and Tamino Minerals

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

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

Diversification Opportunities for Strategic Metals and Tamino Minerals

0.01

Correlation Coefficient

Strategic Metals  Tamino Minerals

Significant diversification

The 3 months correlation between Strategic and Tamino is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Metals and Tamino Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamino Minerals and Strategic 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 Strategic Metals are associated (or correlated) with Tamino Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamino Minerals has no effect on the direction of Strategic Metals i.e., Strategic Metals and Tamino Minerals go up and down completely randomly.

Pair Corralation between Strategic Metals and Tamino Minerals

Assuming the 90 days horizon Strategic Metals is expected to generate 58.1 times less return on investment than Tamino Minerals. But when comparing it to its historical volatility, Strategic Metals is 22.68 times less risky than Tamino Minerals. It trades about 0.05 of its potential returns per unit of risk. Tamino Minerals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Tamino Minerals on November 27, 2024 and sell it today you would earn a total of  0.02  from holding Tamino Minerals or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.66%
Values	Daily Returns

Strategic Metals  vs.  Tamino Minerals

Strategic Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Strategic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Tamino Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tamino Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Tamino Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Metals and Tamino Minerals

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

The idea behind Strategic Metals and Tamino Minerals 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.