Correlation Between Credit Clear and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Credit Clear and Legacy Iron 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 Credit Clear and Legacy Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Clear and Legacy Iron Ore, you can compare the effects of market volatilities on Credit Clear and Legacy Iron 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 Credit Clear with a short position of Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Clear and Legacy Iron.
Diversification Opportunities for Credit Clear and Legacy Iron
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Credit and Legacy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Credit Clear and Legacy Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Iron Ore and Credit Clear 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 Credit Clear are associated (or correlated) with Legacy Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Iron Ore has no effect on the direction of Credit Clear i.e., Credit Clear and Legacy Iron go up and down completely randomly.
Pair Corralation between Credit Clear and Legacy Iron
Assuming the 90 days trading horizon Credit Clear is expected to generate 0.73 times more return on investment than Legacy Iron. However, Credit Clear is 1.36 times less risky than Legacy Iron. It trades about 0.09 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about -0.12 per unit of risk. If you would invest 27.00 in Credit Clear on September 19, 2024 and sell it today you would earn a total of 4.00 from holding Credit Clear or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Clear vs. Legacy Iron Ore
Performance |
| Timeline |
| Credit Clear |
| Legacy Iron Ore |
Credit Clear and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Clear and Legacy Iron
The main advantage of trading using opposite Credit Clear and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Clear position performs unexpectedly, Legacy Iron 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 Legacy Iron will offset losses from the drop in Legacy Iron's long position.| Credit Clear vs. Aneka Tambang Tbk | Credit Clear vs. BHP Group Limited | Credit Clear vs. Commonwealth Bank | Credit Clear vs. Commonwealth Bank of |
| Legacy Iron vs. EMvision Medical Devices | Legacy Iron vs. Alto Metals | Legacy Iron vs. Sky Metals | Legacy Iron vs. Computershare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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