Correlation Between Nevada King and Metals X

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

By analyzing existing cross correlation between Nevada King Gold and Metals X Limited, you can compare the effects of market volatilities on Nevada King and Metals X 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 Nevada King with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nevada King and Metals X.

Diversification Opportunities for Nevada King and Metals X

0.26

Correlation Coefficient

Nevada King  Metals X

Modest diversification

The 3 months correlation between Nevada and Metals is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nevada King Gold and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and Nevada King 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 Nevada King Gold are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of Nevada King i.e., Nevada King and Metals X go up and down completely randomly.

Pair Corralation between Nevada King and Metals X

Assuming the 90 days horizon Nevada King Gold is expected to under-perform the Metals X. In addition to that, Nevada King is 1.17 times more volatile than Metals X Limited. It trades about -0.02 of its total potential returns per unit of risk. Metals X Limited is currently generating about 0.02 per unit of volatility. If you would invest  27.00  in Metals X Limited on September 5, 2024 and sell it today you would lose (1.00) from holding Metals X Limited or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nevada King Gold  vs.  Metals X Limited

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Metals X Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Metals X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nevada King and Metals X

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

The idea behind Nevada King Gold and Metals X Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.