Correlation Between Rising Nonferrous and Industrial

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Can any of the company-specific risk be diversified away by investing in both Rising Nonferrous and Industrial 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 Rising Nonferrous and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rising Nonferrous Metals and Industrial and Commercial, you can compare the effects of market volatilities on Rising Nonferrous and Industrial 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 Rising Nonferrous with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Nonferrous and Industrial.

Diversification Opportunities for Rising Nonferrous and Industrial

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Rising and Industrial is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rising Nonferrous Metals and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Rising Nonferrous 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 Rising Nonferrous Metals are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Rising Nonferrous i.e., Rising Nonferrous and Industrial go up and down completely randomly.

Pair Corralation between Rising Nonferrous and Industrial

Assuming the 90 days trading horizon Rising Nonferrous Metals is expected to under-perform the Industrial. In addition to that, Rising Nonferrous is 1.65 times more volatile than Industrial and Commercial. It trades about -0.05 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.19 per unit of volatility. If you would invest  615.00  in Industrial and Commercial on October 30, 2024 and sell it today you would earn a total of  67.00  from holding Industrial and Commercial or generate 10.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Rising Nonferrous Metals  vs.  Industrial and Commercial

 Performance 
       Timeline  
Rising Nonferrous Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rising Nonferrous Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rising Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Industrial and Commercial 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Rising Nonferrous and Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rising Nonferrous and Industrial

The main advantage of trading using opposite Rising Nonferrous and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rising Nonferrous position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.
The idea behind Rising Nonferrous Metals and Industrial and Commercial 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.
Check out your portfolio center.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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