Correlation Between European Metals and Essensys PLC

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

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

Diversification Opportunities for European Metals and Essensys PLC

-0.76

Correlation Coefficient

European Metals  Essensys PLC

Pay attention - limited upside

The 3 months correlation between European and Essensys is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Essensys PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essensys PLC and European 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 European Metals Holdings are associated (or correlated) with Essensys PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essensys PLC has no effect on the direction of European Metals i.e., European Metals and Essensys PLC go up and down completely randomly.

Pair Corralation between European Metals and Essensys PLC

If you would invest  3,200  in Essensys PLC on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Essensys PLC or generate 0.0% return on investment over 90 days.

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

European Metals Holdings  vs.  Essensys PLC

European Metals Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Metals Holdings 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.

Essensys PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Essensys PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Essensys PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with European Metals and Essensys PLC

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

The idea behind European Metals Holdings and Essensys 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.