Correlation Between Champion Iron and Regal Investment
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Regal Investment 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 Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Regal Investment, you can compare the effects of market volatilities on Champion Iron and Regal Investment 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 Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Regal Investment.
Diversification Opportunities for Champion Iron and Regal Investment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Champion and Regal is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment 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 Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of Champion Iron i.e., Champion Iron and Regal Investment go up and down completely randomly.
Pair Corralation between Champion Iron and Regal Investment
Assuming the 90 days trading horizon Champion Iron is expected to generate 11.55 times less return on investment than Regal Investment. In addition to that, Champion Iron is 1.73 times more volatile than Regal Investment. It trades about 0.0 of its total potential returns per unit of risk. Regal Investment is currently generating about 0.05 per unit of volatility. If you would invest 260.00 in Regal Investment on September 3, 2024 and sell it today you would earn a total of 82.00 from holding Regal Investment or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Regal Investment
Performance |
| Timeline |
| Champion Iron |
| Regal Investment |
Champion Iron and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Regal Investment
The main advantage of trading using opposite Champion Iron and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Regal Investment 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 Regal Investment will offset losses from the drop in Regal Investment'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 |
| Regal Investment vs. ABACUS STORAGE KING | Regal Investment vs. Champion Iron | Regal Investment vs. iShares Global Healthcare | Regal Investment vs. Peel Mining |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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