Correlation Between Ecofibre and Challenger
Can any of the company-specific risk be diversified away by investing in both Ecofibre 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 Ecofibre and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Challenger, you can compare the effects of market volatilities on Ecofibre 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 Ecofibre with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Challenger.
Diversification Opportunities for Ecofibre and Challenger
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ecofibre and Challenger is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Ecofibre 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 Ecofibre 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 Ecofibre i.e., Ecofibre and Challenger go up and down completely randomly.
Pair Corralation between Ecofibre and Challenger
Assuming the 90 days trading horizon Ecofibre is expected to generate 5.87 times more return on investment than Challenger. However, Ecofibre is 5.87 times more volatile than Challenger. It trades about 0.03 of its potential returns per unit of risk. Challenger is currently generating about 0.14 per unit of risk. If you would invest 3.00 in Ecofibre on October 28, 2024 and sell it today you would earn a total of 0.00 from holding Ecofibre or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Challenger
Performance |
| Timeline |
| Ecofibre |
| Challenger |
Ecofibre and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Challenger
The main advantage of trading using opposite Ecofibre and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre 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.| Ecofibre vs. My Foodie Box | Ecofibre vs. Playside Studios | Ecofibre vs. Pinnacle Investment Management | Ecofibre vs. Autosports Group |
| Challenger vs. Charter Hall Retail | Challenger vs. Balkan Mining and | Challenger vs. Duketon Mining | Challenger vs. Aspire Mining |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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