Correlation Between DY6 Metals and Challenger
Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Challenger 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 Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DY6 Metals and Challenger, you can compare the effects of market volatilities on DY6 Metals and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Challenger.
Diversification Opportunities for DY6 Metals and Challenger
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between DY6 and Challenger is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of DY6 Metals i.e., DY6 Metals and Challenger go up and down completely randomly.
Pair Corralation between DY6 Metals and Challenger
Assuming the 90 days trading horizon DY6 Metals is expected to generate 11.43 times more return on investment than Challenger. However, DY6 Metals is 11.43 times more volatile than Challenger. It trades about 0.01 of its potential returns per unit of risk. Challenger is currently generating about -0.01 per unit of risk. If you would invest 24.00 in DY6 Metals on September 3, 2024 and sell it today you would lose (19.20) from holding DY6 Metals or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.15% |
| Values | Daily Returns |
DY6 Metals vs. Challenger
Performance |
| Timeline |
| DY6 Metals |
| Challenger |
DY6 Metals and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DY6 Metals and Challenger
The main advantage of trading using opposite DY6 Metals and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger'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 |
| Challenger vs. Fisher Paykel Healthcare | Challenger vs. Aurelia Metals | Challenger vs. Apiam Animal Health | Challenger vs. DY6 Metals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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