Correlation Between Wallbridge Mining and Euro Manganese

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

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

Diversification Opportunities for Wallbridge Mining and Euro Manganese

0.16

Correlation Coefficient

Wallbridge Mining  Euro Manganese

Average diversification

The 3 months correlation between Wallbridge and Euro is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wallbridge Mining and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese and Wallbridge Mining 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 Wallbridge Mining are associated (or correlated) with Euro Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Manganese has no effect on the direction of Wallbridge Mining i.e., Wallbridge Mining and Euro Manganese go up and down completely randomly.

Pair Corralation between Wallbridge Mining and Euro Manganese

Assuming the 90 days horizon Wallbridge Mining is expected to under-perform the Euro Manganese. But the otc stock apears to be less risky and, when comparing its historical volatility, Wallbridge Mining is 1.24 times less risky than Euro Manganese. The otc stock trades about -0.05 of its potential returns per unit of risk. The Euro Manganese is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4.40  in Euro Manganese on September 3, 2024 and sell it today you would lose (1.30) from holding Euro Manganese or give up 29.55% of portfolio value over 90 days.

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

Wallbridge Mining  vs.  Euro Manganese

Wallbridge Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wallbridge Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Euro Manganese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Manganese has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wallbridge Mining and Euro Manganese

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

The idea behind Wallbridge Mining and Euro Manganese 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 Anywhere module to track or share privately all of your investments from the convenience of any device.