Correlation Between Metals Exploration and Alstria Office

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

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

Diversification Opportunities for Metals Exploration and Alstria Office

0.07

Correlation Coefficient

Metals Exploration  Alstria Office

Significant diversification

The 3 months correlation between Metals and Alstria is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Metals Exploration 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 Metals Exploration Plc are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Metals Exploration i.e., Metals Exploration and Alstria Office go up and down completely randomly.

Pair Corralation between Metals Exploration and Alstria Office

Assuming the 90 days trading horizon Metals Exploration is expected to generate 7.22 times less return on investment than Alstria Office. In addition to that, Metals Exploration is 1.91 times more volatile than alstria office REIT AG. It trades about 0.02 of its total potential returns per unit of risk. alstria office REIT AG is currently generating about 0.22 per unit of volatility. If you would invest  596.00  in alstria office REIT AG on September 23, 2024 and sell it today you would earn a total of  165.00  from holding alstria office REIT AG or generate 27.68% return on investment over 90 days.

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

Metals Exploration Plc  vs.  alstria office REIT AG

Metals Exploration Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Metals Exploration is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

alstria office REIT

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Alstria Office disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals Exploration and Alstria Office

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

The idea behind Metals Exploration Plc and alstria office REIT AG 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.