Correlation Between Metro Mining and Group 6
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Group 6 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 Group 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Group 6 Metals, you can compare the effects of market volatilities on Metro Mining and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Group 6.
Diversification Opportunities for Metro Mining and Group 6
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metro and Group is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 Metals 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Metro Mining i.e., Metro Mining and Group 6 go up and down completely randomly.
Pair Corralation between Metro Mining and Group 6
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.72 times more return on investment than Group 6. However, Metro Mining is 1.39 times less risky than Group 6. It trades about 0.07 of its potential returns per unit of risk. Group 6 Metals is currently generating about -0.01 per unit of risk. If you would invest 4.30 in Metro Mining on August 25, 2024 and sell it today you would earn a total of 1.40 from holding Metro Mining or generate 32.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Metro Mining vs. Group 6 Metals
Performance |
| Timeline |
| Metro Mining |
| Group 6 Metals |
Metro Mining and Group 6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Group 6
The main advantage of trading using opposite Metro Mining and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.| Metro Mining vs. Finexia Financial Group | Metro Mining vs. Ironbark Capital | Metro Mining vs. The Environmental Group | Metro Mining vs. Magellan Financial Group |
| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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