Correlation Between European Metals and Latin Resources
Can any of the company-specific risk be diversified away by investing in both European Metals and Latin Resources 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 Latin Resources 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 Latin Resources Limited, you can compare the effects of market volatilities on European Metals and Latin Resources 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 Latin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Latin Resources.
Diversification Opportunities for European Metals and Latin Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and Latin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Latin Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latin Resources 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 Latin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latin Resources has no effect on the direction of European Metals i.e., European Metals and Latin Resources go up and down completely randomly.
Pair Corralation between European Metals and Latin Resources
Assuming the 90 days horizon European Metals Holdings is expected to under-perform the Latin Resources. In addition to that, European Metals is 4.33 times more volatile than Latin Resources Limited. It trades about -0.02 of its total potential returns per unit of risk. Latin Resources Limited is currently generating about 0.21 per unit of volatility. If you would invest 12.00 in Latin Resources Limited on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Latin Resources Limited or generate 8.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
European Metals Holdings vs. Latin Resources Limited
Performance |
Timeline |
European Metals Holdings |
Latin Resources |
European Metals and Latin Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with European Metals and Latin Resources
The main advantage of trading using opposite European Metals and Latin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Latin Resources 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 Latin Resources will offset losses from the drop in Latin Resources' long position.European Metals vs. Aurelia Metals Limited | European Metals vs. Centaurus Metals Limited | European Metals vs. Artemis Resources | European Metals vs. Ascendant Resources |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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