Correlation Between Metro Mining and Steamships Trading
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Steamships Trading 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 Steamships Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Steamships Trading, you can compare the effects of market volatilities on Metro Mining and Steamships Trading 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 Steamships Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Steamships Trading.
Diversification Opportunities for Metro Mining and Steamships Trading
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and Steamships is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading 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 Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Metro Mining i.e., Metro Mining and Steamships Trading go up and down completely randomly.
Pair Corralation between Metro Mining and Steamships Trading
Assuming the 90 days trading horizon Metro Mining is expected to under-perform the Steamships Trading. In addition to that, Metro Mining is 12.54 times more volatile than Steamships Trading. It trades about -0.05 of its total potential returns per unit of risk. Steamships Trading is currently generating about 0.0 per unit of volatility. If you would invest 1,380 in Steamships Trading on September 28, 2024 and sell it today you would earn a total of 0.00 from holding Steamships Trading or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. Steamships Trading
Performance |
| Timeline |
| Metro Mining |
| Steamships Trading |
Metro Mining and Steamships Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Steamships Trading
The main advantage of trading using opposite Metro Mining and Steamships Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Steamships Trading 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 Steamships Trading will offset losses from the drop in Steamships Trading'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 |
| Steamships Trading vs. Ainsworth Game Technology | Steamships Trading vs. Computershare | Steamships Trading vs. Pinnacle Investment Management | Steamships Trading vs. Platinum Asset Management |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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