Correlation Between Champion Bear and Poseidon Nickel
Can any of the company-specific risk be diversified away by investing in both Champion Bear and Poseidon Nickel 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 Poseidon Nickel 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 Poseidon Nickel Limited, you can compare the effects of market volatilities on Champion Bear and Poseidon Nickel 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 Poseidon Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and Poseidon Nickel.
Diversification Opportunities for Champion Bear and Poseidon Nickel
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Poseidon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and Poseidon Nickel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poseidon Nickel 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 Poseidon Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poseidon Nickel has no effect on the direction of Champion Bear i.e., Champion Bear and Poseidon Nickel go up and down completely randomly.
Pair Corralation between Champion Bear and Poseidon Nickel
Assuming the 90 days horizon Champion Bear is expected to generate 2.32 times less return on investment than Poseidon Nickel. But when comparing it to its historical volatility, Champion Bear Resources is 1.67 times less risky than Poseidon Nickel. It trades about 0.07 of its potential returns per unit of risk. Poseidon Nickel Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Poseidon Nickel Limited on August 29, 2024 and sell it today you would lose (0.60) from holding Poseidon Nickel Limited or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Bear Resources vs. Poseidon Nickel Limited
Performance |
| Timeline |
| Champion Bear Resources |
| Poseidon Nickel |
Champion Bear and Poseidon Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Bear and Poseidon Nickel
The main advantage of trading using opposite Champion Bear and Poseidon Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Bear position performs unexpectedly, Poseidon Nickel 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 Poseidon Nickel will offset losses from the drop in Poseidon Nickel's long position.| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt Corp |
| Poseidon Nickel vs. Centaurus Metals Limited | Poseidon Nickel vs. Ardea Resources Limited | Poseidon Nickel vs. Cobalt Blue Holdings | Poseidon Nickel vs. Champion Bear Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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