Correlation Between Metals X and South Star
Can any of the company-specific risk be diversified away by investing in both Metals X and South Star 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 South Star 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 South Star Battery, you can compare the effects of market volatilities on Metals X and South Star 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 South Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and South Star.
Diversification Opportunities for Metals X and South Star
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metals and South is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery 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 South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of Metals X i.e., Metals X and South Star go up and down completely randomly.
Pair Corralation between Metals X and South Star
Assuming the 90 days horizon Metals X Limited is expected to under-perform the South Star. But the pink sheet apears to be less risky and, when comparing its historical volatility, Metals X Limited is 1.04 times less risky than South Star. The pink sheet trades about -0.01 of its potential returns per unit of risk. The South Star Battery is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 48.00 in South Star Battery on August 29, 2024 and sell it today you would lose (9.00) from holding South Star Battery or give up 18.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals X Limited vs. South Star Battery
Performance |
| Timeline |
| Metals X Limited |
| South Star Battery |
Metals X and South Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and South Star
The main advantage of trading using opposite Metals X and South Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X position performs unexpectedly, South Star 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 South Star will offset losses from the drop in South Star's long position.The idea behind Metals X Limited and South Star Battery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Rockridge Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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