Correlation Between Metals Exploration and Cardinal Health

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Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Cardinal Health 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 Exploration and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Exploration Plc and Cardinal Health, you can compare the effects of market volatilities on Metals Exploration and Cardinal Health 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 Exploration with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Cardinal Health.

Diversification Opportunities for Metals Exploration and Cardinal Health

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Metals and Cardinal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Metals Exploration 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 Exploration Plc are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Metals Exploration i.e., Metals Exploration and Cardinal Health go up and down completely randomly.

Pair Corralation between Metals Exploration and Cardinal Health

Assuming the 90 days trading horizon Metals Exploration Plc is expected to under-perform the Cardinal Health. In addition to that, Metals Exploration is 2.59 times more volatile than Cardinal Health. It trades about -0.14 of its total potential returns per unit of risk. Cardinal Health is currently generating about -0.1 per unit of volatility. If you would invest  12,148  in Cardinal Health on September 24, 2024 and sell it today you would lose (319.00) from holding Cardinal Health or give up 2.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Metals Exploration Plc  vs.  Cardinal Health

 Performance 
       Timeline  
Metals Exploration Plc 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Metals Exploration is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Cardinal Health 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Metals Exploration and Cardinal Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Metals Exploration and Cardinal Health

The main advantage of trading using opposite Metals Exploration and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.
The idea behind Metals Exploration Plc and Cardinal Health 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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