Correlation Between Metals Exploration and Neometals
Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on Metals Exploration and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Neometals.
Diversification Opportunities for Metals Exploration and Neometals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metals and Neometals is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Metals Exploration i.e., Metals Exploration and Neometals go up and down completely randomly.
Pair Corralation between Metals Exploration and Neometals
Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 0.51 times more return on investment than Neometals. However, Metals Exploration Plc is 1.98 times less risky than Neometals. It trades about 0.04 of its potential returns per unit of risk. Neometals is currently generating about -0.11 per unit of risk. If you would invest 594.00 in Metals Exploration Plc on November 27, 2024 and sell it today you would earn a total of 11.00 from holding Metals Exploration Plc or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Metals Exploration Plc vs. Neometals
Performance |
| Timeline |
| Metals Exploration Plc |
| Neometals |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Metals Exploration and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Neometals
The main advantage of trading using opposite Metals Exploration and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| Metals Exploration vs. Wheaton Precious Metals | Metals Exploration vs. AfriTin Mining | Metals Exploration vs. Spirent Communications plc | Metals Exploration vs. Virgin Wines UK |
| Neometals vs. Eastinco Mining Exploration | Neometals vs. Griffin Mining | Neometals vs. Endeavour Mining Corp | Neometals vs. Gamma Communications PLC |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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