Correlation Between Metro Mining and Seek
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Seek 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 Seek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Seek, you can compare the effects of market volatilities on Metro Mining and Seek 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 Seek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Seek.
Diversification Opportunities for Metro Mining and Seek
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metro and Seek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Seek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seek 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 Seek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seek has no effect on the direction of Metro Mining i.e., Metro Mining and Seek go up and down completely randomly.
Pair Corralation between Metro Mining and Seek
Assuming the 90 days trading horizon Metro Mining is expected to generate 2.47 times more return on investment than Seek. However, Metro Mining is 2.47 times more volatile than Seek. It trades about 0.3 of its potential returns per unit of risk. Seek is currently generating about 0.21 per unit of risk. If you would invest 5.20 in Metro Mining on September 3, 2024 and sell it today you would earn a total of 1.10 from holding Metro Mining or generate 21.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. Seek
Performance |
| Timeline |
| Metro Mining |
| Seek |
Metro Mining and Seek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Seek
The main advantage of trading using opposite Metro Mining and Seek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Seek 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 Seek will offset losses from the drop in Seek's long position.| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Aneka Tambang Tbk |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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