Correlation Between DY6 Metals and Beach Energy
Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Beach Energy 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 DY6 Metals and Beach Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DY6 Metals and Beach Energy, you can compare the effects of market volatilities on DY6 Metals and Beach Energy 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 DY6 Metals with a short position of Beach Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Beach Energy.
Diversification Opportunities for DY6 Metals and Beach Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DY6 and Beach is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Beach Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beach Energy and DY6 Metals 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 DY6 Metals are associated (or correlated) with Beach Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beach Energy has no effect on the direction of DY6 Metals i.e., DY6 Metals and Beach Energy go up and down completely randomly.
Pair Corralation between DY6 Metals and Beach Energy
Assuming the 90 days trading horizon DY6 Metals is expected to under-perform the Beach Energy. In addition to that, DY6 Metals is 2.4 times more volatile than Beach Energy. It trades about -0.07 of its total potential returns per unit of risk. Beach Energy is currently generating about -0.08 per unit of volatility. If you would invest 160.00 in Beach Energy on September 3, 2024 and sell it today you would lose (36.00) from holding Beach Energy or give up 22.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DY6 Metals vs. Beach Energy
Performance |
| Timeline |
| DY6 Metals |
| Beach Energy |
DY6 Metals and Beach Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DY6 Metals and Beach Energy
The main advantage of trading using opposite DY6 Metals and Beach Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Beach Energy 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 Beach Energy will offset losses from the drop in Beach Energy's long position.| DY6 Metals vs. Northern Star Resources | DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. Aneka Tambang Tbk |
| Beach Energy vs. Evolution Mining | Beach Energy vs. Zoom2u Technologies | Beach Energy vs. Energy Technologies Limited | Beach Energy vs. EMvision Medical Devices |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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