Correlation Between ACDC Metals and Clime Investment
Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Clime 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 ACDC Metals and Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Clime Investment Management, you can compare the effects of market volatilities on ACDC Metals and Clime 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 ACDC Metals with a short position of Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Clime Investment.
Diversification Opportunities for ACDC Metals and Clime Investment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ACDC and Clime is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and ACDC Metals 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 ACDC Metals are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of ACDC Metals i.e., ACDC Metals and Clime Investment go up and down completely randomly.
Pair Corralation between ACDC Metals and Clime Investment
Assuming the 90 days trading horizon ACDC Metals is expected to generate 1.86 times more return on investment than Clime Investment. However, ACDC Metals is 1.86 times more volatile than Clime Investment Management. It trades about 0.03 of its potential returns per unit of risk. Clime Investment Management is currently generating about 0.04 per unit of risk. If you would invest 5.20 in ACDC Metals on August 27, 2024 and sell it today you would earn a total of 0.30 from holding ACDC Metals or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACDC Metals vs. Clime Investment Management
Performance |
| Timeline |
| ACDC Metals |
| Clime Investment Man |
ACDC Metals and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Clime Investment
The main advantage of trading using opposite ACDC Metals and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Clime 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. Bluescope Steel | ACDC Metals vs. Sandfire Resources NL |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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