Correlation Between Lysaght Galvanized and Minetech Resources
Can any of the company-specific risk be diversified away by investing in both Lysaght Galvanized and Minetech Resources 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 Lysaght Galvanized and Minetech Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lysaght Galvanized Steel and Minetech Resources Bhd, you can compare the effects of market volatilities on Lysaght Galvanized and Minetech Resources 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 Lysaght Galvanized with a short position of Minetech Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lysaght Galvanized and Minetech Resources.
Diversification Opportunities for Lysaght Galvanized and Minetech Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lysaght and Minetech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lysaght Galvanized Steel and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources Bhd and Lysaght Galvanized 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 Lysaght Galvanized Steel are associated (or correlated) with Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Lysaght Galvanized i.e., Lysaght Galvanized and Minetech Resources go up and down completely randomly.
Pair Corralation between Lysaght Galvanized and Minetech Resources
Assuming the 90 days trading horizon Lysaght Galvanized Steel is expected to generate 0.76 times more return on investment than Minetech Resources. However, Lysaght Galvanized Steel is 1.32 times less risky than Minetech Resources. It trades about 0.17 of its potential returns per unit of risk. Minetech Resources Bhd is currently generating about 0.02 per unit of risk. If you would invest 270.00 in Lysaght Galvanized Steel on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Lysaght Galvanized Steel or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Lysaght Galvanized Steel vs. Minetech Resources Bhd
Performance |
| Timeline |
| Lysaght Galvanized Steel |
| Minetech Resources Bhd |
Lysaght Galvanized and Minetech Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lysaght Galvanized and Minetech Resources
The main advantage of trading using opposite Lysaght Galvanized and Minetech Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lysaght Galvanized position performs unexpectedly, Minetech Resources 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 Minetech Resources will offset losses from the drop in Minetech Resources' long position.The idea behind Lysaght Galvanized Steel and Minetech Resources Bhd 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.| Minetech Resources vs. Supercomnet Technologies Bhd | Minetech Resources vs. Mycron Steel Bhd | Minetech Resources vs. Dufu Tech Corp | Minetech Resources vs. Duopharma Biotech Bhd |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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