Correlation Between De Grey and Vulcan Steel
Can any of the company-specific risk be diversified away by investing in both De Grey and Vulcan Steel 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 Vulcan Steel 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 Vulcan Steel, you can compare the effects of market volatilities on De Grey and Vulcan Steel 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 Vulcan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Vulcan Steel.
Diversification Opportunities for De Grey and Vulcan Steel
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DEG and Vulcan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Vulcan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Steel 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 Vulcan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Steel has no effect on the direction of De Grey i.e., De Grey and Vulcan Steel go up and down completely randomly.
Pair Corralation between De Grey and Vulcan Steel
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.78 times more return on investment than Vulcan Steel. However, De Grey Mining is 1.28 times less risky than Vulcan Steel. It trades about 0.05 of its potential returns per unit of risk. Vulcan Steel is currently generating about -0.01 per unit of risk. If you would invest 145.00 in De Grey Mining on August 29, 2024 and sell it today you would earn a total of 3.00 from holding De Grey Mining or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Vulcan Steel
Performance |
| Timeline |
| De Grey Mining |
| Vulcan Steel |
De Grey and Vulcan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Vulcan Steel
The main advantage of trading using opposite De Grey and Vulcan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Vulcan Steel 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 Vulcan Steel will offset losses from the drop in Vulcan Steel's long position.| De Grey vs. Aurelia Metals | De Grey vs. Austco Healthcare | De Grey vs. Health and Plant | De Grey vs. Alto Metals |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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