Correlation Between COAST ENTERTAINMENT and Leeuwin Metals
Can any of the company-specific risk be diversified away by investing in both COAST ENTERTAINMENT and Leeuwin 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 COAST ENTERTAINMENT and Leeuwin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COAST ENTERTAINMENT HOLDINGS and Leeuwin Metals, you can compare the effects of market volatilities on COAST ENTERTAINMENT and Leeuwin 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 COAST ENTERTAINMENT with a short position of Leeuwin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of COAST ENTERTAINMENT and Leeuwin Metals.
Diversification Opportunities for COAST ENTERTAINMENT and Leeuwin Metals
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COAST and Leeuwin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS are associated (or correlated) with Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and Leeuwin Metals go up and down completely randomly.
Pair Corralation between COAST ENTERTAINMENT and Leeuwin Metals
Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to under-perform the Leeuwin Metals. But the stock apears to be less risky and, when comparing its historical volatility, COAST ENTERTAINMENT HOLDINGS is 1.73 times less risky than Leeuwin Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Leeuwin Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.10 in Leeuwin Metals on August 27, 2024 and sell it today you would lose (0.80) from holding Leeuwin Metals or give up 9.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
COAST ENTERTAINMENT HOLDINGS vs. Leeuwin Metals
Performance |
Timeline |
COAST ENTERTAINMENT |
Leeuwin Metals |
COAST ENTERTAINMENT and Leeuwin Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with COAST ENTERTAINMENT and Leeuwin Metals
The main advantage of trading using opposite COAST ENTERTAINMENT and Leeuwin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COAST ENTERTAINMENT position performs unexpectedly, Leeuwin 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 Leeuwin Metals will offset losses from the drop in Leeuwin Metals' long position.COAST ENTERTAINMENT vs. Viva Leisure | COAST ENTERTAINMENT vs. Toys R Us | COAST ENTERTAINMENT vs. Westpac Banking | COAST ENTERTAINMENT vs. Origin Energy |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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