Correlation Between STM Group and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both STM Group and Cornish 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 STM Group and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STM Group Plc and Cornish Metals, you can compare the effects of market volatilities on STM Group and Cornish 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 STM Group with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of STM Group and Cornish Metals.
Diversification Opportunities for STM Group and Cornish Metals
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STM and Cornish is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding STM Group Plc and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and STM Group 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 STM Group Plc are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of STM Group i.e., STM Group and Cornish Metals go up and down completely randomly.
Pair Corralation between STM Group and Cornish Metals
If you would invest 6,150 in STM Group Plc on September 1, 2024 and sell it today you would earn a total of 0.00 from holding STM Group Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 9.09% |
| Values | Daily Returns |
STM Group Plc vs. Cornish Metals
Performance |
| Timeline |
| STM Group Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Cornish Metals |
STM Group and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STM Group and Cornish Metals
The main advantage of trading using opposite STM Group and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STM Group position performs unexpectedly, Cornish 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| STM Group vs. Bisichi Mining PLC | STM Group vs. GreenX Metals | STM Group vs. Wheaton Precious Metals | STM Group vs. Hochschild Mining plc |
| Cornish Metals vs. United Internet AG | Cornish Metals vs. Verizon Communications | Cornish Metals vs. Fulcrum Metals PLC | Cornish Metals vs. Power Metal Resources |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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