Correlation Between Dexus Convenience and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and Sky 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 Dexus Convenience and Sky Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexus Convenience Retail and Sky Metals, you can compare the effects of market volatilities on Dexus Convenience and Sky 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 Dexus Convenience with a short position of Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and Sky Metals.
Diversification Opportunities for Dexus Convenience and Sky Metals
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dexus and Sky is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Metals and Dexus Convenience 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 Dexus Convenience Retail are associated (or correlated) with Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and Sky Metals go up and down completely randomly.
Pair Corralation between Dexus Convenience and Sky Metals
Assuming the 90 days trading horizon Dexus Convenience is expected to generate 15.3 times less return on investment than Sky Metals. But when comparing it to its historical volatility, Dexus Convenience Retail is 5.08 times less risky than Sky Metals. It trades about 0.06 of its potential returns per unit of risk. Sky Metals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Sky Metals on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Sky Metals or generate 64.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. Sky Metals
Performance |
| Timeline |
| Dexus Convenience Retail |
| Sky Metals |
Dexus Convenience and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and Sky Metals
The main advantage of trading using opposite Dexus Convenience and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, Sky 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| Dexus Convenience vs. Seven West Media | Dexus Convenience vs. Carlton Investments | Dexus Convenience vs. Clime Investment Management | Dexus Convenience vs. Centaurus Metals |
| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Aneka Tambang Tbk |
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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