Correlation Between Hannan Metals and Rockhaven Resources
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Rockhaven Resources 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 Rockhaven Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Rockhaven Resources, you can compare the effects of market volatilities on Hannan Metals and Rockhaven Resources 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 Rockhaven Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Rockhaven Resources.
Diversification Opportunities for Hannan Metals and Rockhaven Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hannan and Rockhaven is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Rockhaven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockhaven Resources 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 Rockhaven Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockhaven Resources has no effect on the direction of Hannan Metals i.e., Hannan Metals and Rockhaven Resources go up and down completely randomly.
Pair Corralation between Hannan Metals and Rockhaven Resources
Assuming the 90 days horizon Hannan Metals is expected to generate 1.16 times more return on investment than Rockhaven Resources. However, Hannan Metals is 1.16 times more volatile than Rockhaven Resources. It trades about 0.4 of its potential returns per unit of risk. Rockhaven Resources is currently generating about 0.07 per unit of risk. If you would invest 45.00 in Hannan Metals on September 12, 2024 and sell it today you would earn a total of 36.00 from holding Hannan Metals or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Rockhaven Resources
Performance |
| Timeline |
| Hannan Metals |
| Rockhaven Resources |
Hannan Metals and Rockhaven Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Rockhaven Resources
The main advantage of trading using opposite Hannan Metals and Rockhaven Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Rockhaven Resources 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 Rockhaven Resources will offset losses from the drop in Rockhaven Resources' long position.| Hannan Metals vs. Midnight Sun Mining | Hannan Metals vs. Tristar Gold | Hannan Metals vs. Avrupa Minerals | Hannan Metals vs. Minco Capital Corp |
| Rockhaven Resources vs. Ressources Minieres Radisson | Rockhaven Resources vs. Galantas Gold Corp | Rockhaven Resources vs. Red Pine Exploration | Rockhaven Resources vs. Kore Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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