Correlation Between Huntsman Exploration and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Huntsman Exploration and Teck Resources 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 Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman Exploration and Teck Resources Ltd, you can compare the effects of market volatilities on Huntsman Exploration and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Teck Resources.
Diversification Opportunities for Huntsman Exploration and Teck Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huntsman and Teck is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Teck Resources go up and down completely randomly.
Pair Corralation between Huntsman Exploration and Teck Resources
Assuming the 90 days horizon Huntsman Exploration is expected to generate 16.79 times more return on investment than Teck Resources. However, Huntsman Exploration is 16.79 times more volatile than Teck Resources Ltd. It trades about 0.21 of its potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.03 per unit of risk. If you would invest 2.60 in Huntsman Exploration on November 2, 2024 and sell it today you would earn a total of 2.30 from holding Huntsman Exploration or generate 88.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Huntsman Exploration vs. Teck Resources Ltd
Performance |
| Timeline |
| Huntsman Exploration |
| Teck Resources |
Huntsman Exploration and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman Exploration and Teck Resources
The main advantage of trading using opposite Huntsman Exploration and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman Exploration position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' long position.| Huntsman Exploration vs. Aurelia Metals Limited | Huntsman Exploration vs. Adriatic Metals PLC | Huntsman Exploration vs. American Helium | Huntsman Exploration vs. Progressive Planet Solutions |
| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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