Correlation Between Duketon Mining and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Duketon Mining 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 Duketon Mining and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duketon Mining and Champion Iron, you can compare the effects of market volatilities on Duketon Mining 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 Duketon Mining with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duketon Mining and Champion Iron.
Diversification Opportunities for Duketon Mining and Champion Iron
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Duketon and Champion is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Duketon Mining and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Duketon Mining 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 Duketon 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 Duketon Mining i.e., Duketon Mining and Champion Iron go up and down completely randomly.
Pair Corralation between Duketon Mining and Champion Iron
Assuming the 90 days trading horizon Duketon Mining is expected to generate 1.71 times more return on investment than Champion Iron. However, Duketon Mining is 1.71 times more volatile than Champion Iron. It trades about 0.01 of its potential returns per unit of risk. Champion Iron is currently generating about 0.01 per unit of risk. If you would invest 10.00 in Duketon Mining on October 18, 2024 and sell it today you would lose (0.80) from holding Duketon Mining or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Duketon Mining vs. Champion Iron
Performance |
| Timeline |
| Duketon Mining |
| Champion Iron |
Duketon Mining and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duketon Mining and Champion Iron
The main advantage of trading using opposite Duketon Mining and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duketon Mining 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.| Duketon Mining vs. Australian Unity Office | Duketon Mining vs. Aeris Environmental | Duketon Mining vs. The Environmental Group | Duketon Mining vs. Ironbark Capital |
| Champion Iron vs. Stelar Metals | Champion Iron vs. Sandon Capital Investments | Champion Iron vs. Djerriwarrh Investments | Champion Iron vs. Carlton Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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