Correlation Between Syrah Resources and Ferroglobe PLC
Can any of the company-specific risk be diversified away by investing in both Syrah Resources and Ferroglobe PLC 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 Syrah Resources and Ferroglobe PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Syrah Resources Limited and Ferroglobe PLC, you can compare the effects of market volatilities on Syrah Resources and Ferroglobe PLC 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 Syrah Resources with a short position of Ferroglobe PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Syrah Resources and Ferroglobe PLC.
Diversification Opportunities for Syrah Resources and Ferroglobe PLC
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Syrah and Ferroglobe is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Syrah Resources Limited and Ferroglobe PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferroglobe PLC and Syrah Resources 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 Syrah Resources Limited are associated (or correlated) with Ferroglobe PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferroglobe PLC has no effect on the direction of Syrah Resources i.e., Syrah Resources and Ferroglobe PLC go up and down completely randomly.
Pair Corralation between Syrah Resources and Ferroglobe PLC
Assuming the 90 days horizon Syrah Resources Limited is expected to under-perform the Ferroglobe PLC. In addition to that, Syrah Resources is 2.37 times more volatile than Ferroglobe PLC. It trades about -0.04 of its total potential returns per unit of risk. Ferroglobe PLC is currently generating about 0.02 per unit of volatility. If you would invest 400.00 in Ferroglobe PLC on August 29, 2024 and sell it today you would earn a total of 37.00 from holding Ferroglobe PLC or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Syrah Resources Limited vs. Ferroglobe PLC
Performance |
| Timeline |
| Syrah Resources |
| Ferroglobe PLC |
Syrah Resources and Ferroglobe PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Syrah Resources and Ferroglobe PLC
The main advantage of trading using opposite Syrah Resources and Ferroglobe PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Syrah Resources position performs unexpectedly, Ferroglobe PLC 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 Ferroglobe PLC will offset losses from the drop in Ferroglobe PLC's long position.The idea behind Syrah Resources Limited and Ferroglobe PLC 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.| Ferroglobe PLC vs. Vale SA ADR | Ferroglobe PLC vs. BHP Group Limited | Ferroglobe PLC vs. Glencore PLC ADR | Ferroglobe PLC vs. Piedmont Lithium Ltd |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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