Correlation Between European Metals and Premier African
Can any of the company-specific risk be diversified away by investing in both European Metals and Premier African 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 Premier African 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 Premier African Minerals, you can compare the effects of market volatilities on European Metals and Premier African 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 Premier African. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Premier African.
Diversification Opportunities for European Metals and Premier African
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Premier is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Premier African Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier African Minerals 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 Premier African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier African Minerals has no effect on the direction of European Metals i.e., European Metals and Premier African go up and down completely randomly.
Pair Corralation between European Metals and Premier African
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Premier African. But the stock apears to be less risky and, when comparing its historical volatility, European Metals Holdings is 2.19 times less risky than Premier African. The stock trades about -0.07 of its potential returns per unit of risk. The Premier African Minerals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Premier African Minerals on September 4, 2024 and sell it today you would lose (43.80) from holding Premier African Minerals or give up 89.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Premier African Minerals
Performance |
| Timeline |
| European Metals Holdings |
| Premier African Minerals |
European Metals and Premier African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Premier African
The main advantage of trading using opposite European Metals and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Premier African 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 Premier African will offset losses from the drop in Premier African's long position.| European Metals vs. Antofagasta PLC | European Metals vs. Atalaya Mining | European Metals vs. Ferrexpo PLC | European Metals vs. Amaroq Minerals |
| Premier African vs. Golden Metal Resources | Premier African vs. GreenX Metals | Premier African vs. Gaztransport et Technigaz | Premier African 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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