Correlation Between SPASX Dividend and Chilwa Minerals

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Can any of the company-specific risk be diversified away by investing in both SPASX Dividend and Chilwa Minerals 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 SPASX Dividend and Chilwa Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPASX Dividend Opportunities and Chilwa Minerals Limited, you can compare the effects of market volatilities on SPASX Dividend and Chilwa Minerals 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 SPASX Dividend with a short position of Chilwa Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and Chilwa Minerals.

Diversification Opportunities for SPASX Dividend and Chilwa Minerals

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between SPASX and Chilwa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and Chilwa Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chilwa Minerals and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with Chilwa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chilwa Minerals has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and Chilwa Minerals go up and down completely randomly.
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Pair Corralation between SPASX Dividend and Chilwa Minerals

Assuming the 90 days trading horizon SPASX Dividend Opportunities is expected to generate 0.22 times more return on investment than Chilwa Minerals. However, SPASX Dividend Opportunities is 4.58 times less risky than Chilwa Minerals. It trades about 0.2 of its potential returns per unit of risk. Chilwa Minerals Limited is currently generating about -0.02 per unit of risk. If you would invest  165,690  in SPASX Dividend Opportunities on September 5, 2024 and sell it today you would earn a total of  4,870  from holding SPASX Dividend Opportunities or generate 2.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SPASX Dividend Opportunities  vs.  Chilwa Minerals Limited

 Performance 
       Timeline  

SPASX Dividend and Chilwa Minerals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPASX Dividend and Chilwa Minerals

The main advantage of trading using opposite SPASX Dividend and Chilwa Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX Dividend position performs unexpectedly, Chilwa Minerals 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 Chilwa Minerals will offset losses from the drop in Chilwa Minerals' long position.
The idea behind SPASX Dividend Opportunities and Chilwa Minerals Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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