Correlation Between Neometals and Indutrade

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

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

Diversification Opportunities for Neometals and Indutrade

0.4

Correlation Coefficient

Neometals  Indutrade

Very weak diversification

The 3 months correlation between Neometals and Indutrade is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Neometals 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 Neometals are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Neometals i.e., Neometals and Indutrade go up and down completely randomly.

Pair Corralation between Neometals and Indutrade

Assuming the 90 days trading horizon Neometals is expected to generate 3.57 times more return on investment than Indutrade. However, Neometals is 3.57 times more volatile than Indutrade AB. It trades about -0.02 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.15 per unit of risk. If you would invest  550.00  in Neometals on September 3, 2024 and sell it today you would lose (75.00) from holding Neometals or give up 13.64% of portfolio value over 90 days.

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

Neometals  vs.  Indutrade AB

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB 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.

Pair Trading with Neometals and Indutrade

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

The idea behind Neometals and Indutrade AB 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.