Correlation Between Methes Energies and Core Molding

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

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

Diversification Opportunities for Methes Energies and Core Molding

0.52

Correlation Coefficient

Methes Energies  Core Molding

Very weak diversification

The 3 months correlation between Methes and Core is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Methes Energies International and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and Methes Energies 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 Methes Energies International are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Methes Energies i.e., Methes Energies and Core Molding go up and down completely randomly.

Pair Corralation between Methes Energies and Core Molding

If you would invest  1,865  in Core Molding Technologies on January 25, 2024 and sell it today you would earn a total of  54.00  from holding Core Molding Technologies or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Methes Energies International  vs.  Core Molding Technologies

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.

Core Molding Technologies

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Core Molding Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Core Molding may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Methes Energies and Core Molding

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

The idea behind Methes Energies International and Core Molding Technologies 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.