Correlation Between Aperam PK and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both Aperam PK and Ferrexpo PLC 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 Aperam PK and Ferrexpo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aperam PK and Ferrexpo PLC, you can compare the effects of market volatilities on Aperam PK and Ferrexpo PLC 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 Aperam PK with a short position of Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperam PK and Ferrexpo PLC.
Diversification Opportunities for Aperam PK and Ferrexpo PLC
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aperam and Ferrexpo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC and Aperam PK 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 Aperam PK are associated (or correlated) with Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Aperam PK i.e., Aperam PK and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between Aperam PK and Ferrexpo PLC
Assuming the 90 days horizon Aperam PK is expected to generate 2.35 times less return on investment than Ferrexpo PLC. But when comparing it to its historical volatility, Aperam PK is 1.84 times less risky than Ferrexpo PLC. It trades about 0.02 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Ferrexpo PLC on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Ferrexpo PLC or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.43% |
| Values | Daily Returns |
Aperam PK vs. Ferrexpo PLC
Performance |
| Timeline |
| Aperam PK |
| Ferrexpo PLC |
Aperam PK and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aperam PK and Ferrexpo PLC
The main advantage of trading using opposite Aperam PK and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aperam PK position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| Aperam PK vs. Algoma Steel Group | Aperam PK vs. Kumba Iron Ore | Aperam PK vs. Synalloy | Aperam PK vs. Acerinox SA ADR |
| Ferrexpo PLC vs. Olympic Steel | Ferrexpo PLC vs. Mesabi Trust | Ferrexpo PLC vs. Universal Stainless Alloy | Ferrexpo PLC vs. POSCO Holdings |
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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