Correlation Between Falcon Metals and Duketon Mining
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Duketon Mining 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 Falcon Metals and Duketon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Duketon Mining, you can compare the effects of market volatilities on Falcon Metals and Duketon Mining 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 Falcon Metals with a short position of Duketon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Duketon Mining.
Diversification Opportunities for Falcon Metals and Duketon Mining
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Duketon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Duketon Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duketon Mining and Falcon 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 Falcon Metals are associated (or correlated) with Duketon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duketon Mining has no effect on the direction of Falcon Metals i.e., Falcon Metals and Duketon Mining go up and down completely randomly.
Pair Corralation between Falcon Metals and Duketon Mining
Assuming the 90 days trading horizon Falcon Metals is expected to generate 1.57 times more return on investment than Duketon Mining. However, Falcon Metals is 1.57 times more volatile than Duketon Mining. It trades about 0.02 of its potential returns per unit of risk. Duketon Mining is currently generating about -0.03 per unit of risk. If you would invest 22.00 in Falcon Metals on October 30, 2024 and sell it today you would lose (8.00) from holding Falcon Metals or give up 36.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Duketon Mining
Performance |
| Timeline |
| Falcon Metals |
| Duketon Mining |
Falcon Metals and Duketon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Duketon Mining
The main advantage of trading using opposite Falcon Metals and Duketon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Duketon Mining 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 Duketon Mining will offset losses from the drop in Duketon Mining's long position.| Falcon Metals vs. Mach7 Technologies | Falcon Metals vs. Ras Technology Holdings | Falcon Metals vs. Talisman Mining | Falcon Metals vs. Sun Silver Limited |
| Duketon Mining vs. ARN Media Limited | Duketon Mining vs. Duxton Broadacre Farms | Duketon Mining vs. Farm Pride Foods | Duketon Mining vs. Aussie Broadband |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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