Correlation Between MusicMagpie PLC and First

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

By analyzing existing cross correlation between musicMagpie PLC and First Class Metals, you can compare the effects of market volatilities on MusicMagpie PLC and First 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 MusicMagpie PLC with a short position of First. Check out your portfolio center. Please also check ongoing floating volatility patterns of MusicMagpie PLC and First.

Diversification Opportunities for MusicMagpie PLC and First

-0.15

Correlation Coefficient

MusicMagpie PLC  First

Good diversification

The 3 months correlation between MusicMagpie and First is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding musicMagpie PLC and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals and MusicMagpie PLC 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 musicMagpie PLC are associated (or correlated) with First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of MusicMagpie PLC i.e., MusicMagpie PLC and First go up and down completely randomly.

Pair Corralation between MusicMagpie PLC and First

Assuming the 90 days trading horizon musicMagpie PLC is expected to under-perform the First. But the stock apears to be less risky and, when comparing its historical volatility, musicMagpie PLC is 7.66 times less risky than First. The stock trades about -0.01 of its potential returns per unit of risk. The First Class Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  93.00  in First Class Metals on April 22, 2025 and sell it today you would earn a total of  117.00  from holding First Class Metals or generate 125.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

musicMagpie PLC  vs.  First Class Metals

musicMagpie PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days musicMagpie PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MusicMagpie PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

First Class Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Class Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, First exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MusicMagpie PLC and First

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

The idea behind musicMagpie PLC and First Class 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.