Correlation Between Future Metals and Camellia Plc
Can any of the company-specific risk be diversified away by investing in both Future Metals and Camellia Plc 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 Future Metals and Camellia Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Metals NL and Camellia Plc, you can compare the effects of market volatilities on Future Metals and Camellia Plc 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 Future Metals with a short position of Camellia Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Camellia Plc.
Diversification Opportunities for Future Metals and Camellia Plc
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Future and Camellia is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Camellia Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camellia Plc and Future 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 Future Metals NL are associated (or correlated) with Camellia Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camellia Plc has no effect on the direction of Future Metals i.e., Future Metals and Camellia Plc go up and down completely randomly.
Pair Corralation between Future Metals and Camellia Plc
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Camellia Plc. In addition to that, Future Metals is 3.35 times more volatile than Camellia Plc. It trades about -0.05 of its total potential returns per unit of risk. Camellia Plc is currently generating about -0.01 per unit of volatility. If you would invest 525,000 in Camellia Plc on September 14, 2024 and sell it today you would lose (26,500) from holding Camellia Plc or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Future Metals NL vs. Camellia Plc
Performance |
| Timeline |
| Future Metals NL |
| Camellia Plc |
Future Metals and Camellia Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Camellia Plc
The main advantage of trading using opposite Future Metals and Camellia Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals position performs unexpectedly, Camellia Plc 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 Camellia Plc will offset losses from the drop in Camellia Plc's long position.| Future Metals vs. Givaudan SA | Future Metals vs. Antofagasta PLC | Future Metals vs. Ferrexpo PLC | Future Metals vs. Atalaya Mining |
| Camellia Plc vs. Systemair AB | Camellia Plc vs. Sealed Air Corp | Camellia Plc vs. Future Metals NL | Camellia Plc vs. Universal Music Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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