Correlation Between Hannan Metals and Galway Metals
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Galway 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 Hannan Metals and Galway Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Galway Metals, you can compare the effects of market volatilities on Hannan Metals and Galway 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 Hannan Metals with a short position of Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Galway Metals.
Diversification Opportunities for Hannan Metals and Galway Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hannan and Galway is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals and Hannan 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 Hannan Metals are associated (or correlated) with Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Hannan Metals i.e., Hannan Metals and Galway Metals go up and down completely randomly.
Pair Corralation between Hannan Metals and Galway Metals
Assuming the 90 days horizon Hannan Metals is expected to generate 1.02 times more return on investment than Galway Metals. However, Hannan Metals is 1.02 times more volatile than Galway Metals. It trades about -0.02 of its potential returns per unit of risk. Galway Metals is currently generating about -0.17 per unit of risk. If you would invest 52.00 in Hannan Metals on August 26, 2024 and sell it today you would lose (3.00) from holding Hannan Metals or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Galway Metals
Performance |
| Timeline |
| Hannan Metals |
| Galway Metals |
Hannan Metals and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Galway Metals
The main advantage of trading using opposite Hannan Metals and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Galway 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 Galway Metals will offset losses from the drop in Galway Metals' long position.| Hannan Metals vs. Midnight Sun Mining | Hannan Metals vs. Tristar Gold | Hannan Metals vs. Avrupa Minerals | Hannan Metals vs. Minco Capital Corp |
| Galway Metals vs. Cartier Resources | Galway Metals vs. Tristar Gold | Galway Metals vs. Maritime Resources Corp | Galway Metals vs. Banyan Gold Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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