Correlation Between Fortescue Metals and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Hanison Construction 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 Fortescue Metals and Hanison Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Hanison Construction Holdings, you can compare the effects of market volatilities on Fortescue Metals and Hanison Construction 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 Fortescue Metals with a short position of Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Hanison Construction.
Diversification Opportunities for Fortescue Metals and Hanison Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fortescue and Hanison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction and Fortescue 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 Fortescue Metals Group are associated (or correlated) with Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Hanison Construction go up and down completely randomly.
Pair Corralation between Fortescue Metals and Hanison Construction
Assuming the 90 days horizon Fortescue Metals is expected to generate 7.24 times less return on investment than Hanison Construction. But when comparing it to its historical volatility, Fortescue Metals Group is 1.15 times less risky than Hanison Construction. It trades about 0.01 of its potential returns per unit of risk. Hanison Construction Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.53 in Hanison Construction Holdings on October 11, 2024 and sell it today you would earn a total of 5.47 from holding Hanison Construction Holdings or generate 64.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Hanison Construction Holdings
Performance |
| Timeline |
| Fortescue Metals |
| Hanison Construction |
Fortescue Metals and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Hanison Construction
The main advantage of trading using opposite Fortescue Metals and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Hanison Construction 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.| Fortescue Metals vs. Hanison Construction Holdings | Fortescue Metals vs. Australian Agricultural | Fortescue Metals vs. TYSON FOODS A | Fortescue Metals vs. CN MODERN DAIRY |
| Hanison Construction vs. T MOBILE INCDL 00001 | Hanison Construction vs. JIAHUA STORES | Hanison Construction vs. Ribbon Communications | Hanison Construction vs. GEELY AUTOMOBILE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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