Correlation Between Meta Platforms and Tectonic Metals

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

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

Diversification Opportunities for Meta Platforms and Tectonic Metals

0.91

Correlation Coefficient

Meta Platforms  Tectonic Metals

Almost no diversification

The 3 months correlation between Meta and Tectonic is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms CDR and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and Meta Platforms 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 Meta Platforms CDR are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Meta Platforms i.e., Meta Platforms and Tectonic Metals go up and down completely randomly.

Pair Corralation between Meta Platforms and Tectonic Metals

Assuming the 90 days trading horizon Meta Platforms is expected to generate 29.15 times less return on investment than Tectonic Metals. But when comparing it to its historical volatility, Meta Platforms CDR is 59.49 times less risky than Tectonic Metals. It trades about 0.29 of its potential returns per unit of risk. Tectonic Metals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4.75  in Tectonic Metals on April 22, 2025 and sell it today you would earn a total of  116.25  from holding Tectonic Metals or generate 2447.37% return on investment over 90 days.

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

Meta Platforms CDR  vs.  Tectonic Metals

Meta Platforms CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms CDR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Meta Platforms exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tectonic Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Tectonic Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meta Platforms and Tectonic Metals

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

The idea behind Meta Platforms CDR and Tectonic Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.