Correlation Between MetalsGrove Mining and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both MetalsGrove Mining 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 MetalsGrove Mining and Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetalsGrove Mining and Stelar Metals, you can compare the effects of market volatilities on MetalsGrove Mining 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 MetalsGrove Mining with a short position of Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetalsGrove Mining and Stelar Metals.
Diversification Opportunities for MetalsGrove Mining and Stelar Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetalsGrove and Stelar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MetalsGrove Mining and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and MetalsGrove Mining 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 MetalsGrove Mining 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 MetalsGrove Mining i.e., MetalsGrove Mining and Stelar Metals go up and down completely randomly.
Pair Corralation between MetalsGrove Mining and Stelar Metals
Assuming the 90 days trading horizon MetalsGrove Mining is expected to under-perform the Stelar Metals. In addition to that, MetalsGrove Mining is 1.23 times more volatile than Stelar Metals. It trades about -0.14 of its total potential returns per unit of risk. Stelar Metals is currently generating about -0.06 per unit of volatility. If you would invest 6.70 in Stelar Metals on November 2, 2024 and sell it today you would lose (0.30) from holding Stelar Metals or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetalsGrove Mining vs. Stelar Metals
Performance |
| Timeline |
| MetalsGrove Mining |
| Stelar Metals |
MetalsGrove Mining and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetalsGrove Mining and Stelar Metals
The main advantage of trading using opposite MetalsGrove Mining and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetalsGrove Mining 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.| MetalsGrove Mining vs. Northern Star Resources | MetalsGrove Mining vs. Evolution Mining | MetalsGrove Mining vs. Bluescope Steel | MetalsGrove Mining vs. De Grey Mining |
| Stelar Metals vs. Dug Technology | Stelar Metals vs. TPG Telecom | Stelar Metals vs. WiseTech Global Limited | Stelar Metals vs. Australian Agricultural |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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