Correlation Between Autosports and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Autosports and Hammer Metals 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 Autosports and Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Hammer Metals, you can compare the effects of market volatilities on Autosports and Hammer Metals 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 Autosports with a short position of Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Hammer Metals.
Diversification Opportunities for Autosports and Hammer Metals
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Autosports and Hammer is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals and Autosports 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 Autosports Group are associated (or correlated) with Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Autosports i.e., Autosports and Hammer Metals go up and down completely randomly.
Pair Corralation between Autosports and Hammer Metals
Assuming the 90 days trading horizon Autosports Group is expected to generate 0.36 times more return on investment than Hammer Metals. However, Autosports Group is 2.76 times less risky than Hammer Metals. It trades about -0.12 of its potential returns per unit of risk. Hammer Metals is currently generating about -0.05 per unit of risk. If you would invest 211.00 in Autosports Group on November 2, 2024 and sell it today you would lose (42.00) from holding Autosports Group or give up 19.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Hammer Metals
Performance |
| Timeline |
| Autosports Group |
| Hammer Metals |
Autosports and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Hammer Metals
The main advantage of trading using opposite Autosports and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Autosports vs. Balkan Mining and | Autosports vs. Sky Metals | Autosports vs. De Grey Mining | Autosports vs. Globe Metals Mining |
| Hammer Metals vs. Spirit Telecom | Hammer Metals vs. Argo Investments | Hammer Metals vs. Queste Communications | Hammer Metals vs. Alternative Investment Trust |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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