Correlation Between Australian Strategic and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Australian Strategic 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 Australian Strategic and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and Mount Gibson Iron, you can compare the effects of market volatilities on Australian Strategic 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 Australian Strategic with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Mount Gibson.
Diversification Opportunities for Australian Strategic and Mount Gibson
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Mount is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials 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 Australian Strategic 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 Australian Strategic Materials 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 Australian Strategic i.e., Australian Strategic and Mount Gibson go up and down completely randomly.
Pair Corralation between Australian Strategic and Mount Gibson
Assuming the 90 days trading horizon Australian Strategic Materials is expected to under-perform the Mount Gibson. In addition to that, Australian Strategic is 1.68 times more volatile than Mount Gibson Iron. It trades about -0.03 of its total potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.04 per unit of volatility. If you would invest 69.00 in Mount Gibson Iron on October 16, 2024 and sell it today you would lose (39.00) from holding Mount Gibson Iron or give up 56.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Australian Strategic Materials vs. Mount Gibson Iron
Performance |
| Timeline |
| Australian Strategic |
| Mount Gibson Iron |
Australian Strategic and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and Mount Gibson
The main advantage of trading using opposite Australian Strategic and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic 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.| Australian Strategic vs. Sandon Capital Investments | Australian Strategic vs. K2 Asset Management | Australian Strategic vs. Pinnacle Investment Management | Australian Strategic vs. MFF Capital Investments |
| Mount Gibson vs. Black Rock Mining | Mount Gibson vs. Truscott Mining Corp | Mount Gibson vs. Australian Strategic Materials | Mount Gibson vs. MetalsGrove Mining |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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