Correlation Between CAT Strategic and Hannan Metals
Can any of the company-specific risk be diversified away by investing in both CAT Strategic and Hannan Metals 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 CAT Strategic and Hannan Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAT Strategic Metals and Hannan Metals, you can compare the effects of market volatilities on CAT Strategic and Hannan Metals 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 CAT Strategic with a short position of Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAT Strategic and Hannan Metals.
Diversification Opportunities for CAT Strategic and Hannan Metals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CAT and Hannan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CAT Strategic Metals and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and CAT 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 CAT Strategic Metals are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of CAT Strategic i.e., CAT Strategic and Hannan Metals go up and down completely randomly.
Pair Corralation between CAT Strategic and Hannan Metals
Assuming the 90 days horizon CAT Strategic Metals is expected to generate 8.9 times more return on investment than Hannan Metals. However, CAT Strategic is 8.9 times more volatile than Hannan Metals. It trades about 0.1 of its potential returns per unit of risk. Hannan Metals is currently generating about 0.07 per unit of risk. If you would invest 1.00 in CAT Strategic Metals on November 9, 2024 and sell it today you would lose (0.89) from holding CAT Strategic Metals or give up 89.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
CAT Strategic Metals vs. Hannan Metals
Performance |
| Timeline |
| CAT Strategic Metals |
| Hannan Metals |
CAT Strategic and Hannan Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAT Strategic and Hannan Metals
The main advantage of trading using opposite CAT Strategic and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAT Strategic position performs unexpectedly, Hannan Metals 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.| CAT Strategic vs. Glen Eagle Resources | CAT Strategic vs. Grizzly Discoveries | CAT Strategic vs. Silver Dollar Resources | CAT Strategic vs. Defense Metals Corp |
| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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