Correlation Between Solowin Holdings and Metal Sky

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

By analyzing existing cross correlation between Solowin Holdings Ordinary and Metal Sky Star, you can compare the effects of market volatilities on Solowin Holdings and Metal Sky 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 Solowin Holdings with a short position of Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solowin Holdings and Metal Sky.

Diversification Opportunities for Solowin Holdings and Metal Sky

-0.57

Correlation Coefficient

Solowin Holdings  Metal Sky

Excellent diversification

The 3 months correlation between Solowin and Metal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Solowin Holdings Ordinary and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star and Solowin Holdings 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 Solowin Holdings Ordinary are associated (or correlated) with Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Solowin Holdings i.e., Solowin Holdings and Metal Sky go up and down completely randomly.

Pair Corralation between Solowin Holdings and Metal Sky

Given the investment horizon of 90 days Solowin Holdings Ordinary is expected to under-perform the Metal Sky. In addition to that, Solowin Holdings is 5.79 times more volatile than Metal Sky Star. It trades about -0.04 of its total potential returns per unit of risk. Metal Sky Star is currently generating about 0.08 per unit of volatility. If you would invest  1,134  in Metal Sky Star on September 12, 2024 and sell it today you would earn a total of  54.00  from holding Metal Sky Star or generate 4.76% return on investment over 90 days.

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

Solowin Holdings Ordinary  vs.  Metal Sky Star

Solowin Holdings Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solowin Holdings Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Metal Sky Star

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Solowin Holdings and Metal Sky

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

The idea behind Solowin Holdings Ordinary and Metal Sky Star 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.