Correlation Between Champion Iron and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Stelar Metals 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 Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Stelar Metals, you can compare the effects of market volatilities on Champion Iron and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Stelar Metals.
Diversification Opportunities for Champion Iron and Stelar Metals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Champion and Stelar is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Champion Iron i.e., Champion Iron and Stelar Metals go up and down completely randomly.
Pair Corralation between Champion Iron and Stelar Metals
Assuming the 90 days trading horizon Champion Iron is expected to generate 1.29 times more return on investment than Stelar Metals. However, Champion Iron is 1.29 times more volatile than Stelar Metals. It trades about -0.06 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.1 per unit of risk. If you would invest 544.00 in Champion Iron on December 7, 2024 and sell it today you would lose (22.00) from holding Champion Iron or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Stelar Metals
Performance |
| Timeline |
| Champion Iron |
| Stelar Metals |
Champion Iron and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Stelar Metals
The main advantage of trading using opposite Champion Iron and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Champion Iron vs. Sandon Capital Investments | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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