Correlation Between Champion Iron and Kiplin Metals
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Kiplin 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 Kiplin 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 Kiplin Metals, you can compare the effects of market volatilities on Champion Iron and Kiplin 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 Kiplin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Kiplin Metals.
Diversification Opportunities for Champion Iron and Kiplin Metals
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champion and Kiplin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin 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 Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Champion Iron i.e., Champion Iron and Kiplin Metals go up and down completely randomly.
Pair Corralation between Champion Iron and Kiplin Metals
Assuming the 90 days trading horizon Champion Iron is expected to generate 262.86 times less return on investment than Kiplin Metals. But when comparing it to its historical volatility, Champion Iron is 26.27 times less risky than Kiplin Metals. It trades about 0.01 of its potential returns per unit of risk. Kiplin Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 213.00 in Kiplin Metals on September 3, 2024 and sell it today you would lose (186.00) from holding Kiplin Metals or give up 87.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Kiplin Metals
Performance |
| Timeline |
| Champion Iron |
| Kiplin Metals |
Champion Iron and Kiplin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Kiplin Metals
The main advantage of trading using opposite Champion Iron and Kiplin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Kiplin 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 Kiplin Metals will offset losses from the drop in Kiplin Metals' long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Kiplin Metals vs. Algoma Steel Group | Kiplin Metals vs. Champion Iron | Kiplin Metals vs. International Zeolite Corp | Kiplin Metals vs. European Residential Real |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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