Correlation Between Granite Creek and Huntsman Exploration
Can any of the company-specific risk be diversified away by investing in both Granite Creek and Huntsman Exploration 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 Granite Creek and Huntsman Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Creek Copper and Huntsman Exploration, you can compare the effects of market volatilities on Granite Creek and Huntsman Exploration 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 Granite Creek with a short position of Huntsman Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Creek and Huntsman Exploration.
Diversification Opportunities for Granite Creek and Huntsman Exploration
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Granite and Huntsman is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Granite Creek Copper and Huntsman Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman Exploration and Granite Creek 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 Granite Creek Copper are associated (or correlated) with Huntsman Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman Exploration has no effect on the direction of Granite Creek i.e., Granite Creek and Huntsman Exploration go up and down completely randomly.
Pair Corralation between Granite Creek and Huntsman Exploration
Assuming the 90 days horizon Granite Creek Copper is expected to generate 0.38 times more return on investment than Huntsman Exploration. However, Granite Creek Copper is 2.64 times less risky than Huntsman Exploration. It trades about -0.22 of its potential returns per unit of risk. Huntsman Exploration is currently generating about -0.21 per unit of risk. If you would invest 1.64 in Granite Creek Copper on August 29, 2024 and sell it today you would lose (0.38) from holding Granite Creek Copper or give up 23.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Creek Copper vs. Huntsman Exploration
Performance |
| Timeline |
| Granite Creek Copper |
| Huntsman Exploration |
Granite Creek and Huntsman Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Creek and Huntsman Exploration
The main advantage of trading using opposite Granite Creek and Huntsman Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Creek position performs unexpectedly, Huntsman Exploration 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 Huntsman Exploration will offset losses from the drop in Huntsman Exploration's long position.The idea behind Granite Creek Copper and Huntsman Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Huntsman Exploration vs. Aurelia Metals Limited | Huntsman Exploration vs. Adriatic Metals PLC | Huntsman Exploration vs. American Helium | Huntsman Exploration vs. Progressive Planet Solutions |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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