Correlation Between Power Metal and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Power Metal and Magnora ASA 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 Power Metal and Magnora ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and Magnora ASA, you can compare the effects of market volatilities on Power Metal and Magnora ASA 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 Power Metal with a short position of Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and Magnora ASA.
Diversification Opportunities for Power Metal and Magnora ASA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and Magnora is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA and Power Metal 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 Power Metal Resources are associated (or correlated) with Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Power Metal i.e., Power Metal and Magnora ASA go up and down completely randomly.
Pair Corralation between Power Metal and Magnora ASA
Assuming the 90 days trading horizon Power Metal is expected to generate 4.59 times less return on investment than Magnora ASA. But when comparing it to its historical volatility, Power Metal Resources is 1.74 times less risky than Magnora ASA. It trades about 0.01 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,613 in Magnora ASA on September 1, 2024 and sell it today you would lose (108.00) from holding Magnora ASA or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Power Metal Resources vs. Magnora ASA
Performance |
| Timeline |
| Power Metal Resources |
| Magnora ASA |
Power Metal and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and Magnora ASA
The main advantage of trading using opposite Power Metal and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Centamin PLC | Power Metal vs. Atalaya Mining |
| Magnora ASA vs. Uniper SE | Magnora ASA vs. Mulberry Group PLC | Magnora ASA vs. London Security Plc | Magnora ASA vs. Triad Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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