Correlation Between Empire Metals and SEB SA
Can any of the company-specific risk be diversified away by investing in both Empire Metals and SEB SA 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 Empire Metals and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and SEB SA, you can compare the effects of market volatilities on Empire Metals and SEB SA 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 Empire Metals with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and SEB SA.
Diversification Opportunities for Empire Metals and SEB SA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and SEB is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Empire 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 Empire Metals Limited are associated (or correlated) with SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Empire Metals i.e., Empire Metals and SEB SA go up and down completely randomly.
Pair Corralation between Empire Metals and SEB SA
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 3.27 times more return on investment than SEB SA. However, Empire Metals is 3.27 times more volatile than SEB SA. It trades about 0.08 of its potential returns per unit of risk. SEB SA is currently generating about 0.03 per unit of risk. If you would invest 158.00 in Empire Metals Limited on September 14, 2024 and sell it today you would earn a total of 522.00 from holding Empire Metals Limited or generate 330.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Empire Metals Limited vs. SEB SA
Performance |
| Timeline |
| Empire Metals Limited |
| SEB SA |
Empire Metals and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and SEB SA
The main advantage of trading using opposite Empire Metals and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
| SEB SA vs. Metals Exploration Plc | SEB SA vs. Central Asia Metals | SEB SA vs. AMG Advanced Metallurgical | SEB SA vs. United Airlines Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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