Correlation Between Tower Resources and Metals X

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

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

Diversification Opportunities for Tower Resources and Metals X

-0.38

Correlation Coefficient

Tower Resources  Metals X

Very good diversification

The 3 months correlation between Tower and Metals is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tower Resources and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and Tower Resources 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 Tower Resources are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Tower Resources i.e., Tower Resources and Metals X go up and down completely randomly.

Pair Corralation between Tower Resources and Metals X

Assuming the 90 days horizon Tower Resources is expected to under-perform the Metals X. But the pink sheet apears to be less risky and, when comparing its historical volatility, Tower Resources is 1.62 times less risky than Metals X. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Metals X Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Metals X Limited on December 26, 2024 and sell it today you would earn a total of  18.00  from holding Metals X Limited or generate 72.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tower Resources  vs.  Metals X Limited

Tower Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Metals X Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tower Resources and Metals X

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

The idea behind Tower Resources and Metals X Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.