Correlation Between Ferrexpo PLC and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Capital 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 Ferrexpo PLC and Capital Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Capital Metals PLC, you can compare the effects of market volatilities on Ferrexpo PLC and Capital 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 Ferrexpo PLC with a short position of Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Capital Metals.
Diversification Opportunities for Ferrexpo PLC and Capital Metals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ferrexpo and Capital is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Capital Metals go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Capital Metals
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 0.76 times more return on investment than Capital Metals. However, Ferrexpo PLC is 1.32 times less risky than Capital Metals. It trades about 0.16 of its potential returns per unit of risk. Capital Metals PLC is currently generating about -0.04 per unit of risk. If you would invest 4,300 in Ferrexpo PLC on September 13, 2024 and sell it today you would earn a total of 6,620 from holding Ferrexpo PLC or generate 153.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Capital Metals PLC
Performance |
| Timeline |
| Ferrexpo PLC |
| Capital Metals PLC |
Ferrexpo PLC and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Capital Metals
The main advantage of trading using opposite Ferrexpo PLC and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Capital 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Ferrexpo PLC vs. Sunny Optical Technology | Ferrexpo PLC vs. Pfeiffer Vacuum Technology | Ferrexpo PLC vs. Bytes Technology | Ferrexpo PLC vs. International Biotechnology Trust |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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