Correlation Between European Metals and SSP Group
Can any of the company-specific risk be diversified away by investing in both European 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 European 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 European Metals Holdings and SSP Group PLC, you can compare the effects of market volatilities on European 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 European Metals with a short position of SSP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and SSP Group.
Diversification Opportunities for European Metals and SSP Group
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and SSP is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 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 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 European Metals i.e., European Metals and SSP Group go up and down completely randomly.
Pair Corralation between European Metals and SSP Group
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 2.06 times more return on investment than SSP Group. However, European Metals is 2.06 times more volatile than SSP Group PLC. It trades about 0.1 of its potential returns per unit of risk. SSP Group PLC is currently generating about 0.06 per unit of risk. If you would invest 725.00 in European Metals Holdings on November 3, 2024 and sell it today you would earn a total of 50.00 from holding European Metals Holdings or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
European Metals Holdings vs. SSP Group PLC
Performance |
| Timeline |
| European Metals Holdings |
| SSP Group PLC |
European Metals and SSP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and SSP Group
The main advantage of trading using opposite European Metals and SSP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European 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.| European Metals vs. Zoom Video Communications | European Metals vs. CNH Industrial NV | European Metals vs. GreenX Metals | European Metals vs. McEwen Mining |
| SSP Group vs. Verizon Communications | SSP Group vs. Charter Communications Cl | SSP Group vs. Telecom Italia SpA | SSP Group vs. China Pacific Insurance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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