Correlation Between Champion Iron and Awale Resources
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Awale Resources 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 Awale Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Awale Resources, you can compare the effects of market volatilities on Champion Iron and Awale Resources 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 Awale Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Awale Resources.
Diversification Opportunities for Champion Iron and Awale Resources
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Awale is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Awale Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awale 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 Awale Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awale Resources has no effect on the direction of Champion Iron i.e., Champion Iron and Awale Resources go up and down completely randomly.
Pair Corralation between Champion Iron and Awale Resources
Assuming the 90 days trading horizon Champion Iron is expected to generate 16.22 times less return on investment than Awale Resources. But when comparing it to its historical volatility, Champion Iron is 3.38 times less risky than Awale Resources. It trades about 0.02 of its potential returns per unit of risk. Awale Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Awale Resources on September 4, 2024 and sell it today you would earn a total of 35.00 from holding Awale Resources or generate 250.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Awale Resources
Performance |
| Timeline |
| Champion Iron |
| Awale Resources |
Champion Iron and Awale Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Awale Resources
The main advantage of trading using opposite Champion Iron and Awale Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Awale Resources 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 Awale Resources will offset losses from the drop in Awale Resources' long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Awale Resources vs. First Majestic Silver | Awale Resources vs. Ivanhoe Energy | Awale Resources vs. Orezone Gold Corp | Awale Resources vs. Faraday Copper Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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