Correlation Between Metro Mining and COAST ENTERTAINMENT
Can any of the company-specific risk be diversified away by investing in both Metro Mining and COAST ENTERTAINMENT 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 Metro Mining and COAST ENTERTAINMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and COAST ENTERTAINMENT HOLDINGS, you can compare the effects of market volatilities on Metro Mining and COAST ENTERTAINMENT 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 Metro Mining with a short position of COAST ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and COAST ENTERTAINMENT.
Diversification Opportunities for Metro Mining and COAST ENTERTAINMENT
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metro and COAST is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and COAST ENTERTAINMENT HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COAST ENTERTAINMENT and Metro 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 Metro Mining are associated (or correlated) with COAST ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COAST ENTERTAINMENT has no effect on the direction of Metro Mining i.e., Metro Mining and COAST ENTERTAINMENT go up and down completely randomly.
Pair Corralation between Metro Mining and COAST ENTERTAINMENT
Assuming the 90 days trading horizon Metro Mining is expected to generate 1.64 times more return on investment than COAST ENTERTAINMENT. However, Metro Mining is 1.64 times more volatile than COAST ENTERTAINMENT HOLDINGS. It trades about 0.32 of its potential returns per unit of risk. COAST ENTERTAINMENT HOLDINGS is currently generating about -0.04 per unit of risk. If you would invest 5.20 in Metro Mining on September 4, 2024 and sell it today you would earn a total of 1.20 from holding Metro Mining or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. COAST ENTERTAINMENT HOLDINGS
Performance |
| Timeline |
| Metro Mining |
| COAST ENTERTAINMENT |
Metro Mining and COAST ENTERTAINMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and COAST ENTERTAINMENT
The main advantage of trading using opposite Metro Mining and COAST ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, COAST ENTERTAINMENT 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 COAST ENTERTAINMENT will offset losses from the drop in COAST ENTERTAINMENT's long position.| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Sandfire Resources NL |
| COAST ENTERTAINMENT vs. Viva Leisure | COAST ENTERTAINMENT vs. Toys R Us | COAST ENTERTAINMENT vs. Lendlease Group | COAST ENTERTAINMENT vs. Perseus Mining |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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