Correlation Between Empire Metals and SSP Group
Can any of the company-specific risk be diversified away by investing in both Empire Metals and SSP Group 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 SSP Group 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 SSP Group PLC, you can compare the effects of market volatilities on Empire Metals and SSP Group 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 SSP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and SSP Group.
Diversification Opportunities for Empire Metals and SSP Group
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and SSP is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and SSP Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSP Group PLC 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 SSP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSP Group PLC has no effect on the direction of Empire Metals i.e., Empire Metals and SSP Group go up and down completely randomly.
Pair Corralation between Empire Metals and SSP Group
Assuming the 90 days trading horizon Empire Metals is expected to generate 1.37 times less return on investment than SSP Group. In addition to that, Empire Metals is 1.61 times more volatile than SSP Group PLC. It trades about 0.18 of its total potential returns per unit of risk. SSP Group PLC is currently generating about 0.4 per unit of volatility. If you would invest 15,300 in SSP Group PLC on September 13, 2024 and sell it today you would earn a total of 3,570 from holding SSP Group PLC or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. SSP Group PLC
Performance |
| Timeline |
| Empire Metals Limited |
| SSP Group PLC |
Empire Metals and SSP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and SSP Group
The main advantage of trading using opposite Empire Metals and SSP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, SSP Group 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 SSP Group will offset losses from the drop in SSP Group's long position.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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