Correlation Between Falcon Metals and Itech Minerals

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

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

Diversification Opportunities for Falcon Metals and Itech Minerals

0.44

Correlation Coefficient

Falcon Metals  Itech Minerals

Very weak diversification

The 3 months correlation between Falcon and Itech is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals and Falcon 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 Falcon Metals are associated (or correlated) with Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Falcon Metals i.e., Falcon Metals and Itech Minerals go up and down completely randomly.

Pair Corralation between Falcon Metals and Itech Minerals

Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Itech Minerals. In addition to that, Falcon Metals is 1.26 times more volatile than Itech Minerals. It trades about -0.15 of its total potential returns per unit of risk. Itech Minerals is currently generating about -0.1 per unit of volatility. If you would invest  6.80  in Itech Minerals on September 17, 2024 and sell it today you would lose (1.60) from holding Itech Minerals or give up 23.53% of portfolio value over 90 days.

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

Falcon Metals  vs.  Itech Minerals

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals 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 essential 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.

Itech Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itech Minerals 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 primary 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.

Pair Trading with Falcon Metals and Itech Minerals

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

The idea behind Falcon Metals and Itech Minerals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.