Correlation Between Yellow Pages and International Metals

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Can any of the company-specific risk be diversified away by investing in both Yellow Pages and International 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 Yellow Pages and International Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and International Metals Mining, you can compare the effects of market volatilities on Yellow Pages and International 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 Yellow Pages with a short position of International Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and International Metals.

Diversification Opportunities for Yellow Pages and International Metals

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Yellow and International is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and International Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Metals and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with International Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Metals has no effect on the direction of Yellow Pages i.e., Yellow Pages and International Metals go up and down completely randomly.

Pair Corralation between Yellow Pages and International Metals

Given the investment horizon of 90 days Yellow Pages is expected to generate 184.43 times less return on investment than International Metals. But when comparing it to its historical volatility, Yellow Pages Limited is 7.44 times less risky than International Metals. It trades about 0.0 of its potential returns per unit of risk. International Metals Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  34.00  in International Metals Mining on September 23, 2024 and sell it today you would lose (27.00) from holding International Metals Mining or give up 79.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Yellow Pages Limited  vs.  International Metals Mining

 Performance 
       Timeline  
Yellow Pages Limited 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Yellow Pages displayed solid returns over the last few months and may actually be approaching a breakup point.
International Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days International Metals Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Yellow Pages and International Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yellow Pages and International Metals

The main advantage of trading using opposite Yellow Pages and International Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages position performs unexpectedly, International 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 International Metals will offset losses from the drop in International Metals' long position.
The idea behind Yellow Pages Limited and International Metals Mining 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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