Correlation Between Champion Iron and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Peel Mining, you can compare the effects of market volatilities on Champion Iron and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Peel Mining.
Diversification Opportunities for Champion Iron and Peel Mining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Champion and Peel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Champion Iron i.e., Champion Iron and Peel Mining go up and down completely randomly.
Pair Corralation between Champion Iron and Peel Mining
Assuming the 90 days trading horizon Champion Iron is expected to generate 0.84 times more return on investment than Peel Mining. However, Champion Iron is 1.18 times less risky than Peel Mining. It trades about -0.08 of its potential returns per unit of risk. Peel Mining is currently generating about -0.11 per unit of risk. If you would invest 584.00 in Champion Iron on August 27, 2024 and sell it today you would lose (28.00) from holding Champion Iron or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Peel Mining
Performance |
| Timeline |
| Champion Iron |
| Peel Mining |
Champion Iron and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Peel Mining
The main advantage of trading using opposite Champion Iron and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Sandfire Resources NL |
| Peel Mining vs. Mayfield Childcare | Peel Mining vs. Kip McGrath Education | Peel Mining vs. Hudson Investment Group | Peel Mining vs. Dexus Convenience Retail |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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