Correlation Between SIERRA METALS and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and Thyssenkrupp 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 SIERRA METALS and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and thyssenkrupp AG, you can compare the effects of market volatilities on SIERRA METALS and Thyssenkrupp 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 SIERRA METALS with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Thyssenkrupp.
Diversification Opportunities for SIERRA METALS and Thyssenkrupp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIERRA and Thyssenkrupp is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG and SIERRA METALS 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 SIERRA METALS are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of SIERRA METALS i.e., SIERRA METALS and Thyssenkrupp go up and down completely randomly.
Pair Corralation between SIERRA METALS and Thyssenkrupp
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 0.61 times more return on investment than Thyssenkrupp. However, SIERRA METALS is 1.65 times less risky than Thyssenkrupp. It trades about 0.37 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.05 per unit of risk. If you would invest 46.00 in SIERRA METALS on September 26, 2024 and sell it today you would earn a total of 10.00 from holding SIERRA METALS or generate 21.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SIERRA METALS vs. thyssenkrupp AG
Performance |
Timeline |
SIERRA METALS |
thyssenkrupp AG |
SIERRA METALS and Thyssenkrupp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SIERRA METALS and Thyssenkrupp
The main advantage of trading using opposite SIERRA METALS and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.SIERRA METALS vs. G III Apparel Group | SIERRA METALS vs. Wyndham Hotels Resorts | SIERRA METALS vs. Playa Hotels Resorts | SIERRA METALS vs. Hyatt Hotels |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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