Correlation Between Global Health and Ora Banda
Can any of the company-specific risk be diversified away by investing in both Global Health and Ora Banda 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 Global Health and Ora Banda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Ora Banda Mining, you can compare the effects of market volatilities on Global Health and Ora Banda 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 Global Health with a short position of Ora Banda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Ora Banda.
Diversification Opportunities for Global Health and Ora Banda
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Ora is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Ora Banda Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ora Banda Mining and Global Health 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 Global Health are associated (or correlated) with Ora Banda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ora Banda Mining has no effect on the direction of Global Health i.e., Global Health and Ora Banda go up and down completely randomly.
Pair Corralation between Global Health and Ora Banda
Assuming the 90 days trading horizon Global Health is expected to generate 0.51 times more return on investment than Ora Banda. However, Global Health is 1.96 times less risky than Ora Banda. It trades about 0.01 of its potential returns per unit of risk. Ora Banda Mining is currently generating about -0.25 per unit of risk. If you would invest 14.00 in Global Health on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Ora Banda Mining
Performance |
| Timeline |
| Global Health |
| Ora Banda Mining |
Global Health and Ora Banda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Ora Banda
The main advantage of trading using opposite Global Health and Ora Banda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Ora Banda 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 Ora Banda will offset losses from the drop in Ora Banda's long position.| Global Health vs. Westpac Banking | Global Health vs. Champion Iron | Global Health vs. Ridley | Global Health vs. Peel Mining |
| Ora Banda vs. Northern Star Resources | Ora Banda vs. Evolution Mining | Ora Banda vs. Bluescope Steel | Ora Banda 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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