Correlation Between Champion Iron and CUE Energy
Can any of the company-specific risk be diversified away by investing in both Champion Iron and CUE 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 CUE 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 CUE Energy Resources, you can compare the effects of market volatilities on Champion Iron and CUE 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 CUE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and CUE Energy.
Diversification Opportunities for Champion Iron and CUE Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Champion and CUE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and CUE Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CUE Energy Resources 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 CUE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CUE Energy Resources has no effect on the direction of Champion Iron i.e., Champion Iron and CUE Energy go up and down completely randomly.
Pair Corralation between Champion Iron and CUE Energy
Assuming the 90 days trading horizon Champion Iron is expected to generate 36.14 times less return on investment than CUE Energy. But when comparing it to its historical volatility, Champion Iron is 1.73 times less risky than CUE Energy. It trades about 0.0 of its potential returns per unit of risk. CUE Energy Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.92 in CUE Energy Resources on September 3, 2024 and sell it today you would earn a total of 4.08 from holding CUE Energy Resources or generate 82.93% 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. CUE Energy Resources
Performance |
| Timeline |
| Champion Iron |
| CUE Energy Resources |
Champion Iron and CUE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and CUE Energy
The main advantage of trading using opposite Champion Iron and CUE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, CUE 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 CUE Energy will offset losses from the drop in CUE Energy's long position.| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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