Correlation Between Fulcrum Metals and Metals Exploration

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

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

Diversification Opportunities for Fulcrum Metals and Metals Exploration

-0.33

Correlation Coefficient

Fulcrum Metals  Metals Exploration

Very good diversification

The 3 months correlation between Fulcrum and Metals is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Metals PLC and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration Plc and Fulcrum 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 Fulcrum Metals PLC are associated (or correlated) with Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Fulcrum Metals i.e., Fulcrum Metals and Metals Exploration go up and down completely randomly.

Pair Corralation between Fulcrum Metals and Metals Exploration

Assuming the 90 days trading horizon Fulcrum Metals PLC is expected to generate 0.24 times more return on investment than Metals Exploration. However, Fulcrum Metals PLC is 4.16 times less risky than Metals Exploration. It trades about 0.21 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about -0.12 per unit of risk. If you would invest  750.00  in Fulcrum Metals PLC on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Fulcrum Metals PLC or generate 3.33% return on investment over 90 days.

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

Fulcrum Metals PLC  vs.  Metals Exploration Plc

Fulcrum Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulcrum Metals PLC 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 basic 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.

Metals Exploration Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fulcrum Metals and Metals Exploration

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

The idea behind Fulcrum Metals PLC and Metals Exploration 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.