Correlation Between Carawine Resources and FireFly Metals
Can any of the company-specific risk be diversified away by investing in both Carawine Resources and FireFly 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 Carawine Resources and FireFly Metals 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 FireFly Metals, you can compare the effects of market volatilities on Carawine Resources and FireFly 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 Carawine Resources with a short position of FireFly Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and FireFly Metals.
Diversification Opportunities for Carawine Resources and FireFly Metals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Carawine and FireFly is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals 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 FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of Carawine Resources i.e., Carawine Resources and FireFly Metals go up and down completely randomly.
Pair Corralation between Carawine Resources and FireFly Metals
Assuming the 90 days trading horizon Carawine Resources Limited is expected to generate 0.11 times more return on investment than FireFly Metals. However, Carawine Resources Limited is 9.02 times less risky than FireFly Metals. It trades about 0.42 of its potential returns per unit of risk. FireFly Metals is currently generating about -0.27 per unit of risk. If you would invest 9.70 in Carawine Resources Limited on October 12, 2024 and sell it today you would earn a total of 0.30 from holding Carawine Resources Limited or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Carawine Resources Limited vs. FireFly Metals
Performance |
| Timeline |
| Carawine Resources |
| FireFly Metals |
Carawine Resources and FireFly Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and FireFly Metals
The main advantage of trading using opposite Carawine Resources and FireFly Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources position performs unexpectedly, FireFly 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 FireFly Metals will offset losses from the drop in FireFly Metals' long position.| Carawine Resources vs. Northern Star Resources | Carawine Resources vs. Evolution Mining | Carawine Resources vs. Bluescope Steel | Carawine Resources vs. De Grey Mining |
| FireFly Metals vs. Queste Communications | FireFly Metals vs. Hutchison Telecommunications | FireFly Metals vs. Garda Diversified Ppty | FireFly Metals vs. Carawine Resources Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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