Correlation Between De Grey and Champion Iron
Can any of the company-specific risk be diversified away by investing in both De Grey and Champion Iron 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 De Grey and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Champion Iron, you can compare the effects of market volatilities on De Grey and Champion Iron 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 De Grey with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Champion Iron.
Diversification Opportunities for De Grey and Champion Iron
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between DEG and Champion is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and De Grey 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 De Grey Mining are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of De Grey i.e., De Grey and Champion Iron go up and down completely randomly.
Pair Corralation between De Grey and Champion Iron
Assuming the 90 days trading horizon De Grey Mining is expected to generate 3.35 times more return on investment than Champion Iron. However, De Grey is 3.35 times more volatile than Champion Iron. It trades about 0.17 of its potential returns per unit of risk. Champion Iron is currently generating about 0.09 per unit of risk. If you would invest 149.00 in De Grey Mining on September 20, 2024 and sell it today you would earn a total of 35.00 from holding De Grey Mining or generate 23.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Champion Iron
Performance |
| Timeline |
| De Grey Mining |
| Champion Iron |
De Grey and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Champion Iron
The main advantage of trading using opposite De Grey and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| De Grey vs. Northern Star Resources | De Grey vs. Bluescope Steel | De Grey vs. Sandfire Resources NL | De Grey vs. Aneka Tambang Tbk |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Bluescope Steel | Champion Iron vs. Sandfire Resources NL | Champion Iron vs. De Grey Mining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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