Correlation Between Metro Mining and Singular Health
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Singular Health 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 Metro Mining and Singular Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Singular Health Group, you can compare the effects of market volatilities on Metro Mining and Singular Health 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 Metro Mining with a short position of Singular Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Singular Health.
Diversification Opportunities for Metro Mining and Singular Health
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Singular is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Singular Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singular Health Group and Metro Mining 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 Metro Mining are associated (or correlated) with Singular Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singular Health Group has no effect on the direction of Metro Mining i.e., Metro Mining and Singular Health go up and down completely randomly.
Pair Corralation between Metro Mining and Singular Health
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.69 times more return on investment than Singular Health. However, Metro Mining is 1.44 times less risky than Singular Health. It trades about 0.27 of its potential returns per unit of risk. Singular Health Group is currently generating about 0.13 per unit of risk. If you would invest 3.50 in Metro Mining on September 11, 2024 and sell it today you would earn a total of 2.80 from holding Metro Mining or generate 80.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Metro Mining vs. Singular Health Group
Performance |
Timeline |
Metro Mining |
Singular Health Group |
Metro Mining and Singular Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metro Mining and Singular Health
The main advantage of trading using opposite Metro Mining and Singular Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Singular Health 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 Singular Health will offset losses from the drop in Singular Health's long position.Metro Mining vs. Cleanaway Waste Management | Metro Mining vs. Autosports Group | Metro Mining vs. Bio Gene Technology | Metro Mining vs. Aurelia Metals |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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