Correlation Between GoldMining and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both GoldMining and Hansa Investment 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 GoldMining and Hansa Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Hansa Investment, you can compare the effects of market volatilities on GoldMining and Hansa Investment 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 GoldMining with a short position of Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Hansa Investment.
Diversification Opportunities for GoldMining and Hansa Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GoldMining and Hansa is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment and GoldMining 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 GoldMining are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of GoldMining i.e., GoldMining and Hansa Investment go up and down completely randomly.
Pair Corralation between GoldMining and Hansa Investment
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Hansa Investment. In addition to that, GoldMining is 2.97 times more volatile than Hansa Investment. It trades about -0.17 of its total potential returns per unit of risk. Hansa Investment is currently generating about -0.01 per unit of volatility. If you would invest 22,699 in Hansa Investment on August 24, 2024 and sell it today you would lose (99.00) from holding Hansa Investment or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 63.64% |
| Values | Daily Returns |
GoldMining vs. Hansa Investment
Performance |
| Timeline |
| GoldMining |
| Hansa Investment |
GoldMining and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Hansa Investment
The main advantage of trading using opposite GoldMining and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| GoldMining vs. Quadrise Plc | GoldMining vs. Intuitive Investments Group | GoldMining vs. European Metals Holdings | GoldMining vs. Athelney Trust plc |
| Hansa Investment vs. Darden Restaurants | Hansa Investment vs. Primorus Investments plc | Hansa Investment vs. The Investment | Hansa Investment vs. Auto Trader Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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