Correlation Between Equity Metals and Max Resource

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

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

Diversification Opportunities for Equity Metals and Max Resource

0.17

Correlation Coefficient

Equity Metals  Max Resource

Average diversification

The 3 months correlation between Equity and Max is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals and Max Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Resource Corp and Equity 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 Equity Metals are associated (or correlated) with Max Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Resource Corp has no effect on the direction of Equity Metals i.e., Equity Metals and Max Resource go up and down completely randomly.

Pair Corralation between Equity Metals and Max Resource

Assuming the 90 days horizon Equity Metals is expected to generate 0.68 times more return on investment than Max Resource. However, Equity Metals is 1.46 times less risky than Max Resource. It trades about 0.05 of its potential returns per unit of risk. Max Resource Corp is currently generating about 0.03 per unit of risk. If you would invest  9.50  in Equity Metals on September 3, 2024 and sell it today you would earn a total of  3.50  from holding Equity Metals or generate 36.84% return on investment over 90 days.

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

Equity Metals  vs.  Max Resource Corp

Equity Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Equity Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Max Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Max Resource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Equity Metals and Max Resource

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

The idea behind Equity Metals and Max Resource Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.