Correlation Between Champion Iron and Boss Energy
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Boss Energy 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 Iron and Boss Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Boss Energy Limited, you can compare the effects of market volatilities on Champion Iron and Boss Energy 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 Iron with a short position of Boss Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Boss Energy.
Diversification Opportunities for Champion Iron and Boss Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Champion and Boss is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Champion Iron 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 Iron are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Champion Iron i.e., Champion Iron and Boss Energy go up and down completely randomly.
Pair Corralation between Champion Iron and Boss Energy
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Boss Energy. But the stock apears to be less risky and, when comparing its historical volatility, Champion Iron is 1.39 times less risky than Boss Energy. The stock trades about 0.0 of its potential returns per unit of risk. The Boss Energy Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 255.00 in Boss Energy Limited on November 2, 2024 and sell it today you would earn a total of 59.00 from holding Boss Energy Limited or generate 23.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Boss Energy Limited
Performance |
| Timeline |
| Champion Iron |
| Boss Energy Limited |
Champion Iron and Boss Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Boss Energy
The main advantage of trading using opposite Champion Iron and Boss Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Boss Energy 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 Boss Energy will offset losses from the drop in Boss Energy's long position.| Champion Iron vs. Duketon Mining | Champion Iron vs. Galena Mining | Champion Iron vs. Talisman Mining | Champion Iron vs. Centuria Industrial Reit |
| Boss Energy vs. Auctus Alternative Investments | Boss Energy vs. A1 Investments Resources | Boss Energy vs. Sandon Capital Investments | Boss Energy vs. BlackWall Property Funds |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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