Correlation Between Air New and Classic Minerals
Can any of the company-specific risk be diversified away by investing in both Air New and Classic Minerals 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 Air New and Classic Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Classic Minerals, you can compare the effects of market volatilities on Air New and Classic Minerals 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 Air New with a short position of Classic Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Classic Minerals.
Diversification Opportunities for Air New and Classic Minerals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Classic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Classic Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Classic Minerals and Air New 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 Air New Zealand are associated (or correlated) with Classic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Classic Minerals has no effect on the direction of Air New i.e., Air New and Classic Minerals go up and down completely randomly.
Pair Corralation between Air New and Classic Minerals
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.12 times more return on investment than Classic Minerals. However, Air New Zealand is 8.37 times less risky than Classic Minerals. It trades about -0.03 of its potential returns per unit of risk. Classic Minerals is currently generating about -0.07 per unit of risk. If you would invest 57.00 in Air New Zealand on September 4, 2024 and sell it today you would lose (7.00) from holding Air New Zealand or give up 12.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Air New Zealand vs. Classic Minerals
Performance |
| Timeline |
| Air New Zealand |
| Classic Minerals |
Air New and Classic Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Classic Minerals
The main advantage of trading using opposite Air New and Classic Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Classic Minerals 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 Classic Minerals will offset losses from the drop in Classic Minerals' long position.| Air New vs. Aneka Tambang Tbk | Air New vs. Macquarie Group | Air New vs. Macquarie Group Ltd | Air New vs. Challenger |
| Classic Minerals vs. Northern Star Resources | Classic Minerals vs. Evolution Mining | Classic Minerals vs. Bluescope Steel | Classic Minerals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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