Correlation Between Huntsman Exploration and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Huntsman Exploration and Macmahon Holdings 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 Huntsman Exploration and Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman Exploration and Macmahon Holdings Limited, you can compare the effects of market volatilities on Huntsman Exploration and Macmahon Holdings 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 Huntsman Exploration with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Macmahon Holdings.
Diversification Opportunities for Huntsman Exploration and Macmahon Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huntsman and Macmahon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and Huntsman Exploration 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 Huntsman Exploration are associated (or correlated) with Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Huntsman Exploration and Macmahon Holdings
Assuming the 90 days horizon Huntsman Exploration is expected to generate 15.3 times more return on investment than Macmahon Holdings. However, Huntsman Exploration is 15.3 times more volatile than Macmahon Holdings Limited. It trades about 0.11 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.06 per unit of risk. If you would invest 1.30 in Huntsman Exploration on August 29, 2024 and sell it today you would earn a total of 2.40 from holding Huntsman Exploration or generate 184.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman Exploration vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Huntsman Exploration |
| Macmahon Holdings |
Huntsman Exploration and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman Exploration and Macmahon Holdings
The main advantage of trading using opposite Huntsman Exploration and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman Exploration position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Huntsman Exploration vs. Rockridge Resources | Huntsman Exploration vs. Ameriwest Lithium | Huntsman Exploration vs. Osisko Metals Incorporated | Huntsman Exploration vs. Volt Lithium Corp |
| Macmahon Holdings vs. Esperion Therapeutics | Macmahon Holdings vs. Fevertree Drinks Plc | Macmahon Holdings vs. Compania Cervecerias Unidas | Macmahon Holdings vs. The Joint Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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