Correlation Between European Metals and Deltex Medical
Can any of the company-specific risk be diversified away by investing in both European Metals and Deltex Medical 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 European Metals and Deltex Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Deltex Medical Group, you can compare the effects of market volatilities on European Metals and Deltex Medical 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 European Metals with a short position of Deltex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Deltex Medical.
Diversification Opportunities for European Metals and Deltex Medical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between European and Deltex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Deltex Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltex Medical Group and European 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 European Metals Holdings are associated (or correlated) with Deltex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltex Medical Group has no effect on the direction of European Metals i.e., European Metals and Deltex Medical go up and down completely randomly.
Pair Corralation between European Metals and Deltex Medical
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 0.75 times more return on investment than Deltex Medical. However, European Metals Holdings is 1.33 times less risky than Deltex Medical. It trades about -0.07 of its potential returns per unit of risk. Deltex Medical Group is currently generating about -0.07 per unit of risk. If you would invest 3,600 in European Metals Holdings on September 21, 2024 and sell it today you would lose (2,900) from holding European Metals Holdings or give up 80.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.79% |
| Values | Daily Returns |
European Metals Holdings vs. Deltex Medical Group
Performance |
| Timeline |
| European Metals Holdings |
| Deltex Medical Group |
European Metals and Deltex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Deltex Medical
The main advantage of trading using opposite European Metals and Deltex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Deltex Medical 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 Deltex Medical will offset losses from the drop in Deltex Medical's long position.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Ferrexpo PLC | European Metals vs. Atalaya Mining |
| Deltex Medical vs. Quadrise Plc | Deltex Medical vs. ImmuPharma PLC | Deltex Medical vs. Intuitive Investments Group | Deltex Medical vs. European Metals 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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