Correlation Between Hansa Investment and Target Corp
Can any of the company-specific risk be diversified away by investing in both Hansa Investment and Target Corp 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 Hansa Investment and Target Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Investment and Target Corp, you can compare the effects of market volatilities on Hansa Investment and Target Corp 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 Hansa Investment with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Investment and Target Corp.
Diversification Opportunities for Hansa Investment and Target Corp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hansa and Target is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Hansa Investment 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 Hansa Investment are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Hansa Investment i.e., Hansa Investment and Target Corp go up and down completely randomly.
Pair Corralation between Hansa Investment and Target Corp
Assuming the 90 days trading horizon Hansa Investment is expected to generate 0.94 times more return on investment than Target Corp. However, Hansa Investment is 1.07 times less risky than Target Corp. It trades about 0.08 of its potential returns per unit of risk. Target Corp is currently generating about -0.3 per unit of risk. If you would invest 22,300 in Hansa Investment on November 28, 2024 and sell it today you would earn a total of 500.00 from holding Hansa Investment or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansa Investment vs. Target Corp
Performance |
| Timeline |
| Hansa Investment |
| Target Corp |
Hansa Investment and Target Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansa Investment and Target Corp
The main advantage of trading using opposite Hansa Investment and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.| Hansa Investment vs. URU Metals | Hansa Investment vs. Fulcrum Metals PLC | Hansa Investment vs. Tata Steel Limited | Hansa Investment vs. AMG Advanced Metallurgical |
| Target Corp vs. Sovereign Metals | Target Corp vs. First Class Metals | Target Corp vs. Jacquet Metal Service | Target Corp vs. Cornish Metals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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