Correlation Between FSA and Champion Iron
Can any of the company-specific risk be diversified away by investing in both FSA and Champion Iron 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 FSA and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Champion Iron, you can compare the effects of market volatilities on FSA and Champion Iron 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 FSA with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Champion Iron.
Diversification Opportunities for FSA and Champion Iron
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between FSA and Champion is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and FSA 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 FSA Group are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of FSA i.e., FSA and Champion Iron go up and down completely randomly.
Pair Corralation between FSA and Champion Iron
Assuming the 90 days trading horizon FSA Group is expected to under-perform the Champion Iron. But the stock apears to be less risky and, when comparing its historical volatility, FSA Group is 1.6 times less risky than Champion Iron. The stock trades about -0.04 of its potential returns per unit of risk. The Champion Iron is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 643.00 in Champion Iron on September 3, 2024 and sell it today you would lose (70.00) from holding Champion Iron or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. Champion Iron
Performance |
| Timeline |
| FSA Group |
| Champion Iron |
FSA and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Champion Iron
The main advantage of trading using opposite FSA and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| FSA vs. Beston Global Food | FSA vs. Iron Road | FSA vs. Microequities Asset Management | FSA vs. Autosports Group |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |