Correlation Between Gensource Potash and Huntsman Exploration
Can any of the company-specific risk be diversified away by investing in both Gensource Potash and Huntsman Exploration 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 Gensource Potash and Huntsman Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gensource Potash and Huntsman Exploration, you can compare the effects of market volatilities on Gensource Potash and Huntsman Exploration 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 Gensource Potash with a short position of Huntsman Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gensource Potash and Huntsman Exploration.
Diversification Opportunities for Gensource Potash and Huntsman Exploration
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gensource and Huntsman is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gensource Potash and Huntsman Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman Exploration and Gensource Potash 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 Gensource Potash are associated (or correlated) with Huntsman Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman Exploration has no effect on the direction of Gensource Potash i.e., Gensource Potash and Huntsman Exploration go up and down completely randomly.
Pair Corralation between Gensource Potash and Huntsman Exploration
Assuming the 90 days horizon Gensource Potash is expected to generate 6.17 times more return on investment than Huntsman Exploration. However, Gensource Potash is 6.17 times more volatile than Huntsman Exploration. It trades about 0.24 of its potential returns per unit of risk. Huntsman Exploration is currently generating about 0.06 per unit of risk. If you would invest 1.00 in Gensource Potash on November 27, 2024 and sell it today you would earn a total of 8.00 from holding Gensource Potash or generate 800.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gensource Potash vs. Huntsman Exploration
Performance |
| Timeline |
| Gensource Potash |
| Huntsman Exploration |
Gensource Potash and Huntsman Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gensource Potash and Huntsman Exploration
The main advantage of trading using opposite Gensource Potash and Huntsman Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gensource Potash position performs unexpectedly, Huntsman Exploration 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 Huntsman Exploration will offset losses from the drop in Huntsman Exploration's long position.| Gensource Potash vs. Huntsman Exploration | Gensource Potash vs. Aurelia Metals Limited | Gensource Potash vs. Adriatic Metals PLC | Gensource Potash vs. American Helium |
| Huntsman Exploration vs. Aurelia Metals Limited | Huntsman Exploration vs. Adriatic Metals PLC | Huntsman Exploration vs. American Helium | Huntsman Exploration vs. Progressive Planet Solutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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