Correlation Between Huntsman Exploration and Vale SA
Can any of the company-specific risk be diversified away by investing in both Huntsman Exploration and Vale SA 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 Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman Exploration and Vale SA ADR, you can compare the effects of market volatilities on Huntsman Exploration and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Vale SA.
Diversification Opportunities for Huntsman Exploration and Vale SA
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huntsman and Vale is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Vale SA go up and down completely randomly.
Pair Corralation between Huntsman Exploration and Vale SA
Assuming the 90 days horizon Huntsman Exploration is expected to under-perform the Vale SA. In addition to that, Huntsman Exploration is 6.74 times more volatile than Vale SA ADR. It trades about -0.21 of its total potential returns per unit of risk. Vale SA ADR is currently generating about -0.25 per unit of volatility. If you would invest 1,101 in Vale SA ADR on August 29, 2024 and sell it today you would lose (111.00) from holding Vale SA ADR or give up 10.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman Exploration vs. Vale SA ADR
Performance |
| Timeline |
| Huntsman Exploration |
| Vale SA ADR |
Huntsman Exploration and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman Exploration and Vale SA
The main advantage of trading using opposite Huntsman Exploration and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman Exploration position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's 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 |
| Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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