Correlation Between ACDC Metals and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Lynas Rare 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 Lynas Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Lynas Rare Earths, you can compare the effects of market volatilities on ACDC Metals and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Lynas Rare.
Diversification Opportunities for ACDC Metals and Lynas Rare
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACDC and Lynas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of ACDC Metals i.e., ACDC Metals and Lynas Rare go up and down completely randomly.
Pair Corralation between ACDC Metals and Lynas Rare
Assuming the 90 days trading horizon ACDC Metals is expected to under-perform the Lynas Rare. In addition to that, ACDC Metals is 2.09 times more volatile than Lynas Rare Earths. It trades about -0.41 of its total potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.33 per unit of volatility. If you would invest 765.00 in Lynas Rare Earths on August 31, 2024 and sell it today you would lose (87.00) from holding Lynas Rare Earths or give up 11.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ACDC Metals vs. Lynas Rare Earths
Performance |
| Timeline |
| ACDC Metals |
| Lynas Rare Earths |
ACDC Metals and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Lynas Rare
The main advantage of trading using opposite ACDC Metals and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's long position.| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. Bluescope Steel | ACDC Metals vs. De Grey Mining |
| Lynas Rare vs. ACDC Metals | Lynas Rare vs. Premier Investments | Lynas Rare vs. Aeon Metals | Lynas Rare vs. Skycity Entertainment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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