Correlation Between Black Rock and Emetals

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

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

Diversification Opportunities for Black Rock and Emetals

-0.41

Correlation Coefficient

Black Rock  Emetals

Very good diversification

The 3 months correlation between Black and Emetals is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals and Black Rock 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 Black Rock Mining are associated (or correlated) with Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Black Rock i.e., Black Rock and Emetals go up and down completely randomly.

Pair Corralation between Black Rock and Emetals

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Emetals. In addition to that, Black Rock is 1.43 times more volatile than Emetals. It trades about -0.19 of its total potential returns per unit of risk. Emetals is currently generating about -0.21 per unit of volatility. If you would invest  0.50  in Emetals on September 26, 2024 and sell it today you would lose (0.10) from holding Emetals or give up 20.0% of portfolio value over 90 days.

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

Black Rock Mining  vs.  Emetals

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining 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.

Emetals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emetals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Emetals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Black Rock and Emetals

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

The idea behind Black Rock Mining and Emetals 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 Transaction History module to view history of all your transactions and understand their impact on performance.