Correlation Between Jadestone Energy and European Metals
Can any of the company-specific risk be diversified away by investing in both Jadestone Energy and European 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 Jadestone Energy and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jadestone Energy and European Metals Holdings, you can compare the effects of market volatilities on Jadestone Energy and European 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 Jadestone Energy with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jadestone Energy and European Metals.
Diversification Opportunities for Jadestone Energy and European Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jadestone and European is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jadestone Energy and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Jadestone Energy 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 Jadestone Energy are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Jadestone Energy i.e., Jadestone Energy and European Metals go up and down completely randomly.
Pair Corralation between Jadestone Energy and European Metals
Assuming the 90 days trading horizon Jadestone Energy is expected to generate 0.99 times more return on investment than European Metals. However, Jadestone Energy is 1.01 times less risky than European Metals. It trades about -0.01 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.1 per unit of risk. If you would invest 3,660 in Jadestone Energy on September 2, 2024 and sell it today you would lose (1,160) from holding Jadestone Energy or give up 31.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.39% |
| Values | Daily Returns |
Jadestone Energy vs. European Metals Holdings
Performance |
| Timeline |
| Jadestone Energy |
| European Metals Holdings |
Jadestone Energy and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jadestone Energy and European Metals
The main advantage of trading using opposite Jadestone Energy and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jadestone Energy position performs unexpectedly, European 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 European Metals will offset losses from the drop in European Metals' long position.| Jadestone Energy vs. Ally Financial | Jadestone Energy vs. Hochschild Mining plc | Jadestone Energy vs. Sydbank | Jadestone Energy vs. Metals Exploration Plc |
| European Metals vs. Gaztransport et Technigaz | European Metals vs. Charter Communications Cl | European Metals vs. Telecom Italia SpA | European Metals vs. Public Storage |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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