Correlation Between ACDC Metals and Rea
Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Rea 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 Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Rea Group, you can compare the effects of market volatilities on ACDC Metals and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Rea.
Diversification Opportunities for ACDC Metals and Rea
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ACDC and Rea is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of ACDC Metals i.e., ACDC Metals and Rea go up and down completely randomly.
Pair Corralation between ACDC Metals and Rea
Assuming the 90 days trading horizon ACDC Metals is expected to under-perform the Rea. In addition to that, ACDC Metals is 2.8 times more volatile than Rea Group. It trades about 0.0 of its total potential returns per unit of risk. Rea Group is currently generating about 0.1 per unit of volatility. If you would invest 16,264 in Rea Group on September 4, 2024 and sell it today you would earn a total of 8,740 from holding Rea Group or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
ACDC Metals vs. Rea Group
Performance |
| Timeline |
| ACDC Metals |
| Rea Group |
ACDC Metals and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Rea
The main advantage of trading using opposite ACDC Metals and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea'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 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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