Correlation Between Ragnar Metals and Stelar Metals

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

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

Diversification Opportunities for Ragnar Metals and Stelar Metals

-0.45

Correlation Coefficient

Ragnar Metals  Stelar Metals

Very good diversification

The 3 months correlation between Ragnar and Stelar is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ragnar Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and Ragnar Metals 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 Ragnar Metals are associated (or correlated) with Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Ragnar Metals i.e., Ragnar Metals and Stelar Metals go up and down completely randomly.

Pair Corralation between Ragnar Metals and Stelar Metals

Assuming the 90 days trading horizon Ragnar Metals is expected to generate 0.89 times more return on investment than Stelar Metals. However, Ragnar Metals is 1.12 times less risky than Stelar Metals. It trades about 0.06 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.03 per unit of risk. If you would invest  1.90  in Ragnar Metals on September 2, 2024 and sell it today you would earn a total of  0.20  from holding Ragnar Metals or generate 10.53% return on investment over 90 days.

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

Ragnar Metals  vs.  Stelar Metals

Ragnar Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ragnar Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Ragnar Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Stelar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stelar Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ragnar Metals and Stelar Metals

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

The idea behind Ragnar Metals and Stelar Metals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.