Correlation Between Neometals and Sydbank
Can any of the company-specific risk be diversified away by investing in both Neometals and Sydbank 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 Neometals and Sydbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and Sydbank, you can compare the effects of market volatilities on Neometals and Sydbank 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 Neometals with a short position of Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and Sydbank.
Diversification Opportunities for Neometals and Sydbank
Very good diversification
The 3 months correlation between Neometals and Sydbank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank and Neometals 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 Neometals are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Neometals i.e., Neometals and Sydbank go up and down completely randomly.
Pair Corralation between Neometals and Sydbank
Assuming the 90 days trading horizon Neometals is expected to under-perform the Sydbank. In addition to that, Neometals is 3.21 times more volatile than Sydbank. It trades about -0.09 of its total potential returns per unit of risk. Sydbank is currently generating about 0.04 per unit of volatility. If you would invest 30,125 in Sydbank on August 29, 2024 and sell it today you would earn a total of 4,635 from holding Sydbank or generate 15.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neometals vs. Sydbank
Performance |
| Timeline |
| Neometals |
| Sydbank |
Neometals and Sydbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and Sydbank
The main advantage of trading using opposite Neometals and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.The idea behind Neometals and Sydbank 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.| Sydbank vs. Lendinvest PLC | Sydbank vs. Neometals | Sydbank vs. Albion Technology General | Sydbank vs. Jupiter Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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