Correlation Between OD6 Metals and Greentech Metals
Can any of the company-specific risk be diversified away by investing in both OD6 Metals and Greentech Metals 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 OD6 Metals and Greentech Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OD6 Metals and Greentech Metals, you can compare the effects of market volatilities on OD6 Metals and Greentech Metals 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 OD6 Metals with a short position of Greentech Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of OD6 Metals and Greentech Metals.
Diversification Opportunities for OD6 Metals and Greentech Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OD6 and Greentech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding OD6 Metals and Greentech Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greentech Metals and OD6 Metals 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 OD6 Metals are associated (or correlated) with Greentech Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greentech Metals has no effect on the direction of OD6 Metals i.e., OD6 Metals and Greentech Metals go up and down completely randomly.
Pair Corralation between OD6 Metals and Greentech Metals
Assuming the 90 days trading horizon OD6 Metals is expected to generate 1.35 times more return on investment than Greentech Metals. However, OD6 Metals is 1.35 times more volatile than Greentech Metals. It trades about -0.02 of its potential returns per unit of risk. Greentech Metals is currently generating about -0.06 per unit of risk. If you would invest 7.00 in OD6 Metals on September 3, 2024 and sell it today you would lose (3.80) from holding OD6 Metals or give up 54.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OD6 Metals vs. Greentech Metals
Performance |
| Timeline |
| OD6 Metals |
| Greentech Metals |
OD6 Metals and Greentech Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OD6 Metals and Greentech Metals
The main advantage of trading using opposite OD6 Metals and Greentech Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OD6 Metals position performs unexpectedly, Greentech Metals 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 Greentech Metals will offset losses from the drop in Greentech Metals' long position.| OD6 Metals vs. Northern Star Resources | OD6 Metals vs. Evolution Mining | OD6 Metals vs. Bluescope Steel | OD6 Metals vs. Aneka Tambang Tbk |
| Greentech Metals vs. Northern Star Resources | Greentech Metals vs. Evolution Mining | Greentech Metals vs. Bluescope Steel | Greentech Metals vs. Aneka Tambang Tbk |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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