Correlation Between Indutrade and Neometals

Can any of the company-specific risk be diversified away by investing in both Indutrade and Neometals 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 Indutrade and Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indutrade AB and Neometals, you can compare the effects of market volatilities on Indutrade and Neometals 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 Indutrade with a short position of Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Neometals.

Diversification Opportunities for Indutrade and Neometals

0.4

Correlation Coefficient

Indutrade  Neometals

Very weak diversification

The 3 months correlation between Indutrade and Neometals is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals and Indutrade 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 Indutrade AB are associated (or correlated) with Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Indutrade i.e., Indutrade and Neometals go up and down completely randomly.

Pair Corralation between Indutrade and Neometals

Assuming the 90 days trading horizon Indutrade AB is expected to under-perform the Neometals. But the stock apears to be less risky and, when comparing its historical volatility, Indutrade AB is 3.57 times less risky than Neometals. The stock trades about -0.15 of its potential returns per unit of risk. The Neometals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Neometals on September 3, 2024 and sell it today you would lose (75.00) from holding Neometals or give up 13.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Indutrade AB  vs.  Neometals

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Indutrade and Neometals

The main advantage of trading using opposite Indutrade and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.

The idea behind Indutrade AB and Neometals 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.