Correlation Between APPLIED MATERIALS and Metallurgical

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

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

Diversification Opportunities for APPLIED MATERIALS and Metallurgical

0.38

Correlation Coefficient

APPLIED MATERIALS  Metallurgical

Weak diversification

The 3 months correlation between APPLIED and Metallurgical is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Metallurgical of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallurgical and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallurgical has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Metallurgical go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and Metallurgical

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.5 times more return on investment than Metallurgical. However, APPLIED MATERIALS is 2.0 times less risky than Metallurgical. It trades about 0.22 of its potential returns per unit of risk. Metallurgical of is currently generating about 0.06 per unit of risk. If you would invest  12,026  in APPLIED MATERIALS on April 20, 2025 and sell it today you would earn a total of  4,344  from holding APPLIED MATERIALS or generate 36.12% return on investment over 90 days.

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

APPLIED MATERIALS  vs.  Metallurgical of

APPLIED MATERIALS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in APPLIED MATERIALS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, APPLIED MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Metallurgical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metallurgical of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Metallurgical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APPLIED MATERIALS and Metallurgical

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

The idea behind APPLIED MATERIALS and Metallurgical of 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..