Correlation Between METALL ZUG and Neometals

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

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

Diversification Opportunities for METALL ZUG and Neometals

0.31

Correlation Coefficient

METALL ZUG  Neometals

Weak diversification

The 3 months correlation between METALL and Neometals is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals and METALL ZUG 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 METALL ZUG AG 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 METALL ZUG i.e., METALL ZUG and Neometals go up and down completely randomly.

Pair Corralation between METALL ZUG and Neometals

Assuming the 90 days trading horizon METALL ZUG AG is expected to generate 0.4 times more return on investment than Neometals. However, METALL ZUG AG is 2.49 times less risky than Neometals. It trades about -0.08 of its potential returns per unit of risk. Neometals is currently generating about -0.15 per unit of risk. If you would invest  117,000  in METALL ZUG AG on September 18, 2024 and sell it today you would lose (2,500) from holding METALL ZUG AG or give up 2.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

METALL ZUG AG  vs.  Neometals

METALL ZUG AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METALL ZUG AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METALL ZUG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the 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 rather sound technical and fundamental indicators, Neometals is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with METALL ZUG and Neometals

The main advantage of trading using opposite METALL ZUG and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METALL ZUG 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 METALL ZUG AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.