Correlation Between Anax Metals and WA Kaolin
Can any of the company-specific risk be diversified away by investing in both Anax Metals and WA Kaolin 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 Anax Metals and WA Kaolin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anax Metals and WA Kaolin, you can compare the effects of market volatilities on Anax Metals and WA Kaolin 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 Anax Metals with a short position of WA Kaolin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anax Metals and WA Kaolin.
Diversification Opportunities for Anax Metals and WA Kaolin
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anax and WAK is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Anax Metals and WA Kaolin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WA Kaolin and Anax 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 Anax Metals are associated (or correlated) with WA Kaolin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WA Kaolin has no effect on the direction of Anax Metals i.e., Anax Metals and WA Kaolin go up and down completely randomly.
Pair Corralation between Anax Metals and WA Kaolin
Assuming the 90 days trading horizon Anax Metals is expected to under-perform the WA Kaolin. In addition to that, Anax Metals is 1.27 times more volatile than WA Kaolin. It trades about -0.14 of its total potential returns per unit of risk. WA Kaolin is currently generating about 0.12 per unit of volatility. If you would invest 5.40 in WA Kaolin on September 2, 2024 and sell it today you would earn a total of 0.50 from holding WA Kaolin or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anax Metals vs. WA Kaolin
Performance |
| Timeline |
| Anax Metals |
| WA Kaolin |
Anax Metals and WA Kaolin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anax Metals and WA Kaolin
The main advantage of trading using opposite Anax Metals and WA Kaolin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anax Metals position performs unexpectedly, WA Kaolin 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 WA Kaolin will offset losses from the drop in WA Kaolin's long position.| Anax Metals vs. Dexus Convenience Retail | Anax Metals vs. Beston Global Food | Anax Metals vs. Ras Technology Holdings | Anax Metals vs. Charter Hall Education |
| WA Kaolin vs. Northern Star Resources | WA Kaolin vs. Evolution Mining | WA Kaolin vs. Bluescope Steel | WA Kaolin 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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