Correlation Between Sky Metals and De Grey

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

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

Diversification Opportunities for Sky Metals and De Grey

0.49

Correlation Coefficient

Sky Metals  De Grey

Very weak diversification

The 3 months correlation between Sky and DEG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and Sky 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 Sky Metals are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Sky Metals i.e., Sky Metals and De Grey go up and down completely randomly.

Pair Corralation between Sky Metals and De Grey

Assuming the 90 days trading horizon Sky Metals is expected to generate 1.47 times less return on investment than De Grey. In addition to that, Sky Metals is 1.06 times more volatile than De Grey Mining. It trades about 0.1 of its total potential returns per unit of risk. De Grey Mining is currently generating about 0.15 per unit of volatility. If you would invest  130.00  in De Grey Mining on September 19, 2024 and sell it today you would earn a total of  55.00  from holding De Grey Mining or generate 42.31% return on investment over 90 days.

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

Sky Metals  vs.  De Grey Mining

Sky Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sky Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sky Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

De Grey Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sky Metals and De Grey

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

The idea behind Sky Metals and De Grey Mining 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.