Correlation Between De Grey and Meeka Metals
Can any of the company-specific risk be diversified away by investing in both De Grey and Meeka 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 De Grey and Meeka Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Meeka Metals Limited, you can compare the effects of market volatilities on De Grey and Meeka 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 De Grey with a short position of Meeka Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Meeka Metals.
Diversification Opportunities for De Grey and Meeka Metals
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEG and Meeka is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Meeka Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meeka Metals Limited and De Grey 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 De Grey Mining are associated (or correlated) with Meeka Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meeka Metals Limited has no effect on the direction of De Grey i.e., De Grey and Meeka Metals go up and down completely randomly.
Pair Corralation between De Grey and Meeka Metals
Assuming the 90 days trading horizon De Grey is expected to generate 1.37 times less return on investment than Meeka Metals. But when comparing it to its historical volatility, De Grey Mining is 3.91 times less risky than Meeka Metals. It trades about 0.4 of its potential returns per unit of risk. Meeka Metals Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 9.60 in Meeka Metals Limited on November 9, 2024 and sell it today you would earn a total of 1.40 from holding Meeka Metals Limited or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Meeka Metals Limited
Performance |
| Timeline |
| De Grey Mining |
| Meeka Metals Limited |
De Grey and Meeka Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Meeka Metals
The main advantage of trading using opposite De Grey and Meeka Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Meeka 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 Meeka Metals will offset losses from the drop in Meeka Metals' long position.| De Grey vs. Home Consortium | De Grey vs. Dalaroo Metals | De Grey vs. Centaurus Metals | De Grey vs. Aeon Metals |
| Meeka Metals vs. Evolution Mining | Meeka Metals vs. Bluescope Steel | Meeka Metals vs. Perseus Mining | Meeka Metals vs. Champion Iron |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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