Correlation Between Oceanic Iron and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Oceanic Iron and Australian Strategic 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 Oceanic Iron and Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Iron Ore and Australian Strategic Materials, you can compare the effects of market volatilities on Oceanic Iron and Australian Strategic 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 Oceanic Iron with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Iron and Australian Strategic.
Diversification Opportunities for Oceanic Iron and Australian Strategic
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oceanic and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Iron Ore and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Oceanic Iron 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 Oceanic Iron Ore are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Oceanic Iron i.e., Oceanic Iron and Australian Strategic go up and down completely randomly.
Pair Corralation between Oceanic Iron and Australian Strategic
Assuming the 90 days horizon Oceanic Iron Ore is expected to generate 0.74 times more return on investment than Australian Strategic. However, Oceanic Iron Ore is 1.35 times less risky than Australian Strategic. It trades about 0.04 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.04 per unit of risk. If you would invest 6.00 in Oceanic Iron Ore on September 20, 2024 and sell it today you would earn a total of 1.00 from holding Oceanic Iron Ore or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 81.93% |
| Values | Daily Returns |
Oceanic Iron Ore vs. Australian Strategic Materials
Performance |
| Timeline |
| Oceanic Iron Ore |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Australian Strategic |
Oceanic Iron and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Iron and Australian Strategic
The main advantage of trading using opposite Oceanic Iron and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Iron position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| Oceanic Iron vs. Avarone Metals | Oceanic Iron vs. Aurelia Metals Limited | Oceanic Iron vs. Adriatic Metals PLC | Oceanic Iron vs. Huntsman Exploration |
| Australian Strategic vs. IGO Limited | Australian Strategic vs. Focus Graphite | Australian Strategic vs. Anson Resources Limited | Australian Strategic vs. Avarone 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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