Correlation Between Champion Bear and Altiplano Metals
Can any of the company-specific risk be diversified away by investing in both Champion Bear and Altiplano 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 Champion Bear and Altiplano Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Bear Resources and Altiplano Metals, you can compare the effects of market volatilities on Champion Bear and Altiplano 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 Champion Bear with a short position of Altiplano Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and Altiplano Metals.
Diversification Opportunities for Champion Bear and Altiplano Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champion and Altiplano is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and Altiplano Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altiplano Metals and Champion Bear 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 Champion Bear Resources are associated (or correlated) with Altiplano Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altiplano Metals has no effect on the direction of Champion Bear i.e., Champion Bear and Altiplano Metals go up and down completely randomly.
Pair Corralation between Champion Bear and Altiplano Metals
Assuming the 90 days horizon Champion Bear Resources is expected to generate 0.8 times more return on investment than Altiplano Metals. However, Champion Bear Resources is 1.25 times less risky than Altiplano Metals. It trades about -0.21 of its potential returns per unit of risk. Altiplano Metals is currently generating about -0.24 per unit of risk. If you would invest 6.00 in Champion Bear Resources on August 28, 2024 and sell it today you would lose (2.00) from holding Champion Bear Resources or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Bear Resources vs. Altiplano Metals
Performance |
| Timeline |
| Champion Bear Resources |
| Altiplano Metals |
Champion Bear and Altiplano Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Bear and Altiplano Metals
The main advantage of trading using opposite Champion Bear and Altiplano Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Bear position performs unexpectedly, Altiplano 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 Altiplano Metals will offset losses from the drop in Altiplano Metals' long position.The idea behind Champion Bear Resources and Altiplano Metals 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.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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