Correlation Between Empire Metals and Panther Metals

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

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

Diversification Opportunities for Empire Metals and Panther Metals

-0.52

Correlation Coefficient

Empire Metals  Panther Metals

Excellent diversification

The 3 months correlation between Empire and Panther is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Panther Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panther Metals PLC and Empire 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 Empire Metals Limited are associated (or correlated) with Panther Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panther Metals PLC has no effect on the direction of Empire Metals i.e., Empire Metals and Panther Metals go up and down completely randomly.

Pair Corralation between Empire Metals and Panther Metals

Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 0.66 times more return on investment than Panther Metals. However, Empire Metals Limited is 1.51 times less risky than Panther Metals. It trades about 0.01 of its potential returns per unit of risk. Panther Metals PLC is currently generating about -0.03 per unit of risk. If you would invest  685.00  in Empire Metals Limited on September 14, 2024 and sell it today you would lose (5.00) from holding Empire Metals Limited or give up 0.73% of portfolio value over 90 days.

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

Empire Metals Limited  vs.  Panther Metals PLC

Empire Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Panther Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panther Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Empire Metals and Panther Metals

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

The idea behind Empire Metals Limited and Panther Metals PLC 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.