Correlation Between GoPro and Metalfrio Solutions

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

By analyzing existing cross correlation between GoPro Inc and Metalfrio Solutions SA, you can compare the effects of market volatilities on GoPro and Metalfrio Solutions 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 GoPro with a short position of Metalfrio Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoPro and Metalfrio Solutions.

Diversification Opportunities for GoPro and Metalfrio Solutions

0.03

Correlation Coefficient

GoPro  Metalfrio Solutions

Significant diversification

The 3 months correlation between GoPro and Metalfrio is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Metalfrio Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalfrio Solutions and GoPro 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 GoPro Inc are associated (or correlated) with Metalfrio Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalfrio Solutions has no effect on the direction of GoPro i.e., GoPro and Metalfrio Solutions go up and down completely randomly.

Pair Corralation between GoPro and Metalfrio Solutions

Assuming the 90 days trading horizon GoPro Inc is expected to under-perform the Metalfrio Solutions. In addition to that, GoPro is 1.4 times more volatile than Metalfrio Solutions SA. It trades about -0.06 of its total potential returns per unit of risk. Metalfrio Solutions SA is currently generating about 0.4 per unit of volatility. If you would invest  14,550  in Metalfrio Solutions SA on September 23, 2024 and sell it today you would earn a total of  3,249  from holding Metalfrio Solutions SA or generate 22.33% return on investment over 90 days.

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

GoPro Inc  vs.  Metalfrio Solutions SA

GoPro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GoPro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Metalfrio Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalfrio Solutions SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Metalfrio Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoPro and Metalfrio Solutions

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

The idea behind GoPro Inc and Metalfrio Solutions SA 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.