Correlation Between Metals X and OM Holdings
Can any of the company-specific risk be diversified away by investing in both Metals X and OM Holdings 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 Metals X and OM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals X Limited and OM Holdings Limited, you can compare the effects of market volatilities on Metals X and OM Holdings 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 Metals X with a short position of OM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and OM Holdings.
Diversification Opportunities for Metals X and OM Holdings
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metals and OMHLF is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and OM Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OM Holdings Limited and Metals X 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 Metals X Limited are associated (or correlated) with OM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OM Holdings Limited has no effect on the direction of Metals X i.e., Metals X and OM Holdings go up and down completely randomly.
Pair Corralation between Metals X and OM Holdings
Assuming the 90 days horizon Metals X Limited is expected to generate 2.39 times more return on investment than OM Holdings. However, Metals X is 2.39 times more volatile than OM Holdings Limited. It trades about 0.04 of its potential returns per unit of risk. OM Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest 20.00 in Metals X Limited on August 27, 2024 and sell it today you would earn a total of 7.00 from holding Metals X Limited or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals X Limited vs. OM Holdings Limited
Performance |
| Timeline |
| Metals X Limited |
| OM Holdings Limited |
Metals X and OM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and OM Holdings
The main advantage of trading using opposite Metals X and OM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X position performs unexpectedly, OM Holdings 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 OM Holdings will offset losses from the drop in OM Holdings' long position.| Metals X vs. Eramet SA ADR | Metals X vs. NGEx Minerals | Metals X vs. Forum Energy Metals | Metals X vs. Adriatic Metals Plc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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