Correlation Between MFF Capital and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Stelar 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 MFF Capital and Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and Stelar Metals, you can compare the effects of market volatilities on MFF Capital and Stelar 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 MFF Capital with a short position of Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Stelar Metals.
Diversification Opportunities for MFF Capital and Stelar Metals
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MFF and Stelar is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and MFF Capital 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 MFF Capital Investments are associated (or correlated) with Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of MFF Capital i.e., MFF Capital and Stelar Metals go up and down completely randomly.
Pair Corralation between MFF Capital and Stelar Metals
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.25 times more return on investment than Stelar Metals. However, MFF Capital Investments is 4.08 times less risky than Stelar Metals. It trades about 0.15 of its potential returns per unit of risk. Stelar Metals is currently generating about 0.01 per unit of risk. If you would invest 347.00 in MFF Capital Investments on August 29, 2024 and sell it today you would earn a total of 85.00 from holding MFF Capital Investments or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Stelar Metals
Performance |
| Timeline |
| MFF Capital Investments |
| Stelar Metals |
MFF Capital and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Stelar Metals
The main advantage of trading using opposite MFF Capital and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Stelar 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| MFF Capital vs. Aussie Broadband | MFF Capital vs. Regal Funds Management | MFF Capital vs. Platinum Asset Management | MFF Capital vs. Richmond Vanadium Technology |
| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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