Correlation Between Alien Metals and CMC Metals
Can any of the company-specific risk be diversified away by investing in both Alien Metals and CMC 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 Alien Metals and CMC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alien Metals and CMC Metals, you can compare the effects of market volatilities on Alien Metals and CMC 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 Alien Metals with a short position of CMC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alien Metals and CMC Metals.
Diversification Opportunities for Alien Metals and CMC Metals
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alien and CMC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals and Alien 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 Alien Metals are associated (or correlated) with CMC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Metals has no effect on the direction of Alien Metals i.e., Alien Metals and CMC Metals go up and down completely randomly.
Pair Corralation between Alien Metals and CMC Metals
Assuming the 90 days horizon Alien Metals is expected to generate 4.71 times more return on investment than CMC Metals. However, Alien Metals is 4.71 times more volatile than CMC Metals. It trades about 0.15 of its potential returns per unit of risk. CMC Metals is currently generating about 0.07 per unit of risk. If you would invest 0.55 in Alien Metals on September 3, 2024 and sell it today you would lose (0.43) from holding Alien Metals or give up 78.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Alien Metals vs. CMC Metals
Performance |
| Timeline |
| Alien Metals |
| CMC Metals |
Alien Metals and CMC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alien Metals and CMC Metals
The main advantage of trading using opposite Alien Metals and CMC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alien Metals position performs unexpectedly, CMC 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 CMC Metals will offset losses from the drop in CMC Metals' long position.| Alien Metals vs. Cartier Iron Corp | Alien Metals vs. Arctic Star Exploration | Alien Metals vs. Denarius Silver Corp | Alien Metals vs. Pacific Ridge Exploration |
| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. AbraSilver Resource Corp | CMC Metals vs. Gatos Silver |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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