Correlation Between ABACUS STORAGE and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both ABACUS STORAGE and Mount Gibson 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 ABACUS STORAGE and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABACUS STORAGE KING and Mount Gibson Iron, you can compare the effects of market volatilities on ABACUS STORAGE and Mount Gibson 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 ABACUS STORAGE with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Mount Gibson.
Diversification Opportunities for ABACUS STORAGE and Mount Gibson
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABACUS and Mount is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Mount Gibson go up and down completely randomly.
Pair Corralation between ABACUS STORAGE and Mount Gibson
Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to under-perform the Mount Gibson. But the stock apears to be less risky and, when comparing its historical volatility, ABACUS STORAGE KING is 1.53 times less risky than Mount Gibson. The stock trades about -0.25 of its potential returns per unit of risk. The Mount Gibson Iron is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Mount Gibson Iron on August 29, 2024 and sell it today you would lose (2.00) from holding Mount Gibson Iron or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABACUS STORAGE KING vs. Mount Gibson Iron
Performance |
| Timeline |
| ABACUS STORAGE KING |
| Mount Gibson Iron |
ABACUS STORAGE and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABACUS STORAGE and Mount Gibson
The main advantage of trading using opposite ABACUS STORAGE and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| ABACUS STORAGE vs. Westpac Banking | ABACUS STORAGE vs. Odyssey Energy | ABACUS STORAGE vs. Insurance Australia Group | ABACUS STORAGE vs. Origin Energy |
| Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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