Correlation Between Ramp Metals and Minco Capital

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

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

Diversification Opportunities for Ramp Metals and Minco Capital

-0.12

Correlation Coefficient

Ramp Metals  Minco Capital

Good diversification

The 3 months correlation between Ramp and Minco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ramp Metals and Minco Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minco Capital Corp and Ramp 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 Ramp Metals are associated (or correlated) with Minco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minco Capital Corp has no effect on the direction of Ramp Metals i.e., Ramp Metals and Minco Capital go up and down completely randomly.

Pair Corralation between Ramp Metals and Minco Capital

Assuming the 90 days trading horizon Ramp Metals is expected to generate 1.08 times more return on investment than Minco Capital. However, Ramp Metals is 1.08 times more volatile than Minco Capital Corp. It trades about 0.06 of its potential returns per unit of risk. Minco Capital Corp is currently generating about -0.05 per unit of risk. If you would invest  63.00  in Ramp Metals on September 3, 2024 and sell it today you would earn a total of  7.00  from holding Ramp Metals or generate 11.11% return on investment over 90 days.

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

Ramp Metals  vs.  Minco Capital Corp

Ramp Metals

Risk-Adjusted Performance

4 of 100

Insignificant

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

Minco Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minco Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ramp Metals and Minco Capital

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

The idea behind Ramp Metals and Minco Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.