Correlation Between Group 6 and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Group 6 and Stelar Metals 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 Group 6 and Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and Stelar Metals, you can compare the effects of market volatilities on Group 6 and Stelar Metals 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 Group 6 with a short position of Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and Stelar Metals.
Diversification Opportunities for Group 6 and Stelar Metals
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Group and Stelar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and Group 6 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 Group 6 Metals are associated (or correlated) with Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Group 6 i.e., Group 6 and Stelar Metals go up and down completely randomly.
Pair Corralation between Group 6 and Stelar Metals
Assuming the 90 days trading horizon Group 6 Metals is expected to generate 0.88 times more return on investment than Stelar Metals. However, Group 6 Metals is 1.14 times less risky than Stelar Metals. It trades about -0.02 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.06 per unit of risk. If you would invest 2.80 in Group 6 Metals on August 28, 2024 and sell it today you would lose (0.30) from holding Group 6 Metals or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Group 6 Metals vs. Stelar Metals
Performance |
| Timeline |
| Group 6 Metals |
| Stelar Metals |
Group 6 and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and Stelar Metals
The main advantage of trading using opposite Group 6 and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
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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