Correlation Between Treasury Metals and Heliostar Metals

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

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

Diversification Opportunities for Treasury Metals and Heliostar Metals

0.16

Correlation Coefficient

Treasury Metals  Heliostar Metals

Average diversification

The 3 months correlation between Treasury and Heliostar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Metals and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals and Treasury 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 Treasury Metals are associated (or correlated) with Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Treasury Metals i.e., Treasury Metals and Heliostar Metals go up and down completely randomly.

Pair Corralation between Treasury Metals and Heliostar Metals

Assuming the 90 days horizon Treasury Metals is expected to generate 4.88 times less return on investment than Heliostar Metals. In addition to that, Treasury Metals is 1.04 times more volatile than Heliostar Metals. It trades about 0.01 of its total potential returns per unit of risk. Heliostar Metals is currently generating about 0.06 per unit of volatility. If you would invest  18.00  in Heliostar Metals on October 26, 2024 and sell it today you would earn a total of  23.00  from holding Heliostar Metals or generate 127.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.27%
Values	Daily Returns

Treasury Metals  vs.  Heliostar Metals

Treasury Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Treasury Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heliostar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heliostar Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Heliostar Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Treasury Metals and Heliostar Metals

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

The idea behind Treasury Metals and Heliostar 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.