Correlation Between Champion Iron and Harvest Technology
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Harvest Technology 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 Harvest Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Harvest Technology Group, you can compare the effects of market volatilities on Champion Iron and Harvest Technology 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 Harvest Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Harvest Technology.
Diversification Opportunities for Champion Iron and Harvest Technology
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Harvest is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Harvest Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Technology 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 Harvest Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Technology has no effect on the direction of Champion Iron i.e., Champion Iron and Harvest Technology go up and down completely randomly.
Pair Corralation between Champion Iron and Harvest Technology
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Harvest Technology. But the stock apears to be less risky and, when comparing its historical volatility, Champion Iron is 4.48 times less risky than Harvest Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Harvest Technology Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1.40 in Harvest Technology Group on September 3, 2024 and sell it today you would earn a total of 1.50 from holding Harvest Technology Group or generate 107.14% 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. Harvest Technology Group
Performance |
| Timeline |
| Champion Iron |
| Harvest Technology |
Champion Iron and Harvest Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Harvest Technology
The main advantage of trading using opposite Champion Iron and Harvest Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Harvest Technology 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 Harvest Technology will offset losses from the drop in Harvest Technology'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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