Correlation Between Champion Iron and Highland Copper
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Highland Copper 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 Highland Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Highland Copper, you can compare the effects of market volatilities on Champion Iron and Highland Copper 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 Highland Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Highland Copper.
Diversification Opportunities for Champion Iron and Highland Copper
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Champion and Highland is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Highland Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Copper 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 Highland Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Copper has no effect on the direction of Champion Iron i.e., Champion Iron and Highland Copper go up and down completely randomly.
Pair Corralation between Champion Iron and Highland Copper
Assuming the 90 days trading horizon Champion Iron is expected to generate 7.68 times less return on investment than Highland Copper. But when comparing it to its historical volatility, Champion Iron is 2.67 times less risky than Highland Copper. It trades about 0.02 of its potential returns per unit of risk. Highland Copper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Highland Copper on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Highland Copper or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Champion Iron vs. Highland Copper
Performance |
| Timeline |
| Champion Iron |
| Highland Copper |
Champion Iron and Highland Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Highland Copper
The main advantage of trading using opposite Champion Iron and Highland Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Highland Copper 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 Highland Copper will offset losses from the drop in Highland Copper's long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Highland Copper vs. Themac Resources Group | Highland Copper vs. Gunpoint Exploration | Highland Copper vs. Golden Pursuit Resources | Highland Copper vs. Goldbank Mining 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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