Correlation Between Neometals and MT Bank

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

By analyzing existing cross correlation between Neometals and MT Bank Corp, you can compare the effects of market volatilities on Neometals and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and MT Bank.

Diversification Opportunities for Neometals and MT Bank

-0.06

Correlation Coefficient

Neometals  MT Bank

Good diversification

The 3 months correlation between Neometals and 0JW2 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Neometals i.e., Neometals and MT Bank go up and down completely randomly.

Pair Corralation between Neometals and MT Bank

Assuming the 90 days trading horizon Neometals is expected to under-perform the MT Bank. In addition to that, Neometals is 2.47 times more volatile than MT Bank Corp. It trades about -0.02 of its total potential returns per unit of risk. MT Bank Corp is currently generating about 0.21 per unit of volatility. If you would invest  17,230  in MT Bank Corp on August 31, 2024 and sell it today you would earn a total of  4,886  from holding MT Bank Corp or generate 28.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Neometals  vs.  MT Bank Corp

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 weak 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.

MT Bank Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MT Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neometals and MT Bank

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

The idea behind Neometals and MT Bank Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.