Correlation Between Tombador Iron and Metro Mining

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

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

Diversification Opportunities for Tombador Iron and Metro Mining

0.0

Correlation Coefficient

Tombador Iron  Metro Mining

Pay attention - limited upside

The 3 months correlation between Tombador and Metro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tombador Iron and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and Tombador Iron 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 Tombador Iron are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Tombador Iron i.e., Tombador Iron and Metro Mining go up and down completely randomly.

Pair Corralation between Tombador Iron and Metro Mining

If you would invest  5.50  in Metro Mining on October 21, 2024 and sell it today you would earn a total of  0.20  from holding Metro Mining or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tombador Iron  vs.  Metro Mining

Tombador Iron

Risk-Adjusted Performance

0 of 100

Very Weak

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

Metro Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Metro Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tombador Iron and Metro Mining

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

The idea behind Tombador Iron and Metro Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.