Correlation Between Cornish Metals and Alien Metals
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and Alien 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 Cornish Metals and Alien Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Alien Metals, you can compare the effects of market volatilities on Cornish Metals and Alien 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 Cornish Metals with a short position of Alien Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Alien Metals.
Diversification Opportunities for Cornish Metals and Alien Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cornish and Alien is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals and Cornish 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 Cornish Metals are associated (or correlated) with Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Cornish Metals i.e., Cornish Metals and Alien Metals go up and down completely randomly.
Pair Corralation between Cornish Metals and Alien Metals
Assuming the 90 days trading horizon Cornish Metals is expected to generate 0.49 times more return on investment than Alien Metals. However, Cornish Metals is 2.06 times less risky than Alien Metals. It trades about 0.21 of its potential returns per unit of risk. Alien Metals is currently generating about 0.06 per unit of risk. If you would invest 865.00 in Cornish Metals on October 21, 2024 and sell it today you would earn a total of 60.00 from holding Cornish Metals or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Alien Metals
Performance |
| Timeline |
| Cornish Metals |
| Alien Metals |
Cornish Metals and Alien Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Alien Metals
The main advantage of trading using opposite Cornish Metals and Alien Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, Alien 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 Alien Metals will offset losses from the drop in Alien Metals' long position.| Cornish Metals vs. Worldwide Healthcare Trust | Cornish Metals vs. JPMorgan Japanese Investment | Cornish Metals vs. Lindsell Train Investment | Cornish Metals vs. Spire Healthcare Group |
| Alien Metals vs. Alaska Air Group | Alien Metals vs. Amedeo Air Four | Alien Metals vs. Bisichi Mining PLC | Alien Metals vs. Europa Metals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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