Correlation Between Neometals and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both Neometals and Rockfire Resources 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 Rockfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and Rockfire Resources plc, you can compare the effects of market volatilities on Neometals and Rockfire Resources 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 Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and Rockfire Resources.
Diversification Opportunities for Neometals and Rockfire Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Neometals and Rockfire is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources plc 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 Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of Neometals i.e., Neometals and Rockfire Resources go up and down completely randomly.
Pair Corralation between Neometals and Rockfire Resources
Assuming the 90 days trading horizon Neometals is expected to generate 1.58 times more return on investment than Rockfire Resources. However, Neometals is 1.58 times more volatile than Rockfire Resources plc. It trades about -0.11 of its potential returns per unit of risk. Rockfire Resources plc is currently generating about -0.17 per unit of risk. If you would invest 375.00 in Neometals on November 28, 2024 and sell it today you would lose (25.00) from holding Neometals or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 27.27% |
| Values | Daily Returns |
Neometals vs. Rockfire Resources plc
Performance |
| Timeline |
| Neometals |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Rockfire Resources plc |
Neometals and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and Rockfire Resources
The main advantage of trading using opposite Neometals and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals position performs unexpectedly, Rockfire Resources 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 Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| Neometals vs. Spirent Communications plc | Neometals vs. Litigation Capital Management | Neometals vs. Science in Sport | Neometals vs. Cairo Communication SpA |
| Rockfire Resources vs. Aeorema Communications Plc | Rockfire Resources vs. Gamma Communications PLC | Rockfire Resources vs. Telecom Italia SpA | Rockfire Resources vs. Ebro Foods |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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