Correlation Between TMT Investments and Fulcrum Metals

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

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

Diversification Opportunities for TMT Investments and Fulcrum Metals

0.35

Correlation Coefficient

TMT Investments  Fulcrum Metals

Weak diversification

The 3 months correlation between TMT and Fulcrum is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC and Fulcrum Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Metals PLC and TMT Investments 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 TMT Investments PLC are associated (or correlated) with Fulcrum Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Metals PLC has no effect on the direction of TMT Investments i.e., TMT Investments and Fulcrum Metals go up and down completely randomly.

Pair Corralation between TMT Investments and Fulcrum Metals

Assuming the 90 days trading horizon TMT Investments PLC is expected to generate 0.29 times more return on investment than Fulcrum Metals. However, TMT Investments PLC is 3.45 times less risky than Fulcrum Metals. It trades about -0.17 of its potential returns per unit of risk. Fulcrum Metals PLC is currently generating about -0.15 per unit of risk. If you would invest  304.00  in TMT Investments PLC on December 29, 2024 and sell it today you would lose (39.00) from holding TMT Investments PLC or give up 12.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

TMT Investments PLC  vs.  Fulcrum Metals PLC

TMT Investments PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMT Investments PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fulcrum Metals PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fulcrum Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TMT Investments and Fulcrum Metals

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

The idea behind TMT Investments PLC and Fulcrum Metals PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.