Correlation Between European Metals and Lomiko Metals
Can any of the company-specific risk be diversified away by investing in both European Metals and Lomiko Metals 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 Lomiko Metals 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 Lomiko Metals, you can compare the effects of market volatilities on European Metals and Lomiko Metals 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 Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Lomiko Metals.
Diversification Opportunities for European Metals and Lomiko Metals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Lomiko is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals 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 Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of European Metals i.e., European Metals and Lomiko Metals go up and down completely randomly.
Pair Corralation between European Metals and Lomiko Metals
Assuming the 90 days horizon European Metals is expected to generate 1.44 times less return on investment than Lomiko Metals. In addition to that, European Metals is 1.08 times more volatile than Lomiko Metals. It trades about 0.09 of its total potential returns per unit of risk. Lomiko Metals is currently generating about 0.14 per unit of volatility. If you would invest 8.10 in Lomiko Metals on November 3, 2024 and sell it today you would earn a total of 1.20 from holding Lomiko Metals or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Lomiko Metals
Performance |
| Timeline |
| European Metals Holdings |
| Lomiko Metals |
European Metals and Lomiko Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Lomiko Metals
The main advantage of trading using opposite European Metals and Lomiko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Lomiko Metals 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 Lomiko Metals will offset losses from the drop in Lomiko Metals' long position.| European Metals vs. Aurelia Metals Limited | European Metals vs. Centaurus Metals Limited | European Metals vs. Artemis Resources | European Metals vs. Ascendant Resources |
| Lomiko Metals vs. Hannan Metals | Lomiko Metals vs. Atco Mining | Lomiko Metals vs. Leading Edge Materials | Lomiko Metals vs. Arianne Phosphate |
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 CEOs Directory module to screen CEOs from public companies around the world.
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