Correlation Between United Royale and Pampa Metals

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

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

Diversification Opportunities for United Royale and Pampa Metals

0.0

Correlation Coefficient

United Royale  Pampa Metals

Pay attention - limited upside

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

Pair Corralation between United Royale and Pampa Metals

If you would invest  11.00  in Pampa Metals on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Pampa Metals or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

United Royale Holdings  vs.  Pampa Metals

United Royale Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Royale Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, United Royale is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pampa Metals

Risk-Adjusted Performance

Insignificant

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

Pair Trading with United Royale and Pampa Metals

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

The idea behind United Royale Holdings and Pampa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.