Correlation Between Future Metals and Various Eateries

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

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

Diversification Opportunities for Future Metals and Various Eateries

0.22

Correlation Coefficient

Future Metals  Various Eateries

Modest diversification

The 3 months correlation between Future and Various is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries PLC and Future 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 Future Metals NL are associated (or correlated) with Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of Future Metals i.e., Future Metals and Various Eateries go up and down completely randomly.

Pair Corralation between Future Metals and Various Eateries

Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Various Eateries. In addition to that, Future Metals is 7.06 times more volatile than Various Eateries PLC. It trades about -0.09 of its total potential returns per unit of risk. Various Eateries PLC is currently generating about -0.18 per unit of volatility. If you would invest  1,800  in Various Eateries PLC on September 20, 2024 and sell it today you would lose (100.00) from holding Various Eateries PLC or give up 5.56% of portfolio value over 90 days.

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

Future Metals NL  vs.  Various Eateries PLC

Future Metals NL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Metals NL 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Various Eateries PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Various Eateries PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Various Eateries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Future Metals and Various Eateries

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

The idea behind Future Metals NL and Various Eateries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.