Correlation Between 5E Advanced and Methes Energies

Can any of the company-specific risk be diversified away by investing in both 5E Advanced and Methes Energies 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 5E Advanced and Methes Energies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5E Advanced Materials and Methes Energies International, you can compare the effects of market volatilities on 5E Advanced and Methes Energies 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 5E Advanced with a short position of Methes Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5E Advanced and Methes Energies.

Diversification Opportunities for 5E Advanced and Methes Energies

-0.23

Correlation Coefficient

5E Advanced  Methes Energies

Very good diversification

The 3 months correlation between FEAM and Methes is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Methes Energies International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methes Energies Inte and 5E Advanced 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 5E Advanced Materials are associated (or correlated) with Methes Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methes Energies Inte has no effect on the direction of 5E Advanced i.e., 5E Advanced and Methes Energies go up and down completely randomly.

Pair Corralation between 5E Advanced and Methes Energies

Given the investment horizon of 90 days 5E Advanced Materials is expected to under-perform the Methes Energies. But the stock apears to be less risky and, when comparing its historical volatility, 5E Advanced Materials is 2.47 times less risky than Methes Energies. The stock trades about -0.06 of its potential returns per unit of risk. The Methes Energies International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.50  in Methes Energies International on February 10, 2024 and sell it today you would earn a total of  0.00  from holding Methes Energies International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.64%
Values	Daily Returns

5E Advanced Materials  vs.  Methes Energies International

5E Advanced Materials

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 5E Advanced Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, 5E Advanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Methes Energies Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methes Energies International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Methes Energies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with 5E Advanced and Methes Energies

The main advantage of trading using opposite 5E Advanced and Methes Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced position performs unexpectedly, Methes Energies 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 Methes Energies will offset losses from the drop in Methes Energies' long position.

The idea behind 5E Advanced Materials and Methes Energies International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.