Correlation Between Carawine Resources and Challenger
Can any of the company-specific risk be diversified away by investing in both Carawine Resources and Challenger 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 Carawine Resources and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carawine Resources Limited and Challenger, you can compare the effects of market volatilities on Carawine Resources and Challenger 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 Carawine Resources with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and Challenger.
Diversification Opportunities for Carawine Resources and Challenger
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Carawine and Challenger is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Carawine Resources 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 Carawine Resources Limited are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Carawine Resources i.e., Carawine Resources and Challenger go up and down completely randomly.
Pair Corralation between Carawine Resources and Challenger
Assuming the 90 days trading horizon Carawine Resources Limited is expected to generate 2.37 times more return on investment than Challenger. However, Carawine Resources is 2.37 times more volatile than Challenger. It trades about 0.01 of its potential returns per unit of risk. Challenger is currently generating about -0.01 per unit of risk. If you would invest 13.00 in Carawine Resources Limited on October 13, 2024 and sell it today you would lose (3.00) from holding Carawine Resources Limited or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carawine Resources Limited vs. Challenger
Performance |
| Timeline |
| Carawine Resources |
| Challenger |
Carawine Resources and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and Challenger
The main advantage of trading using opposite Carawine Resources and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Carawine Resources vs. Mirrabooka Investments | Carawine Resources vs. Oceania Healthcare | Carawine Resources vs. Sandon Capital Investments | Carawine Resources vs. Healthco Healthcare and |
| Challenger vs. Carawine Resources Limited | Challenger vs. Kneomedia | Challenger vs. Dexus Convenience Retail | Challenger vs. G8 Education |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |