Correlation Between Hannan Metals and Aldebaran Resources
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Aldebaran 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 Aldebaran 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 Aldebaran Resources, you can compare the effects of market volatilities on Hannan Metals and Aldebaran 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 Aldebaran Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Aldebaran Resources.
Diversification Opportunities for Hannan Metals and Aldebaran Resources
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hannan and Aldebaran is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Aldebaran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldebaran 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 Aldebaran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldebaran Resources has no effect on the direction of Hannan Metals i.e., Hannan Metals and Aldebaran Resources go up and down completely randomly.
Pair Corralation between Hannan Metals and Aldebaran Resources
Assuming the 90 days horizon Hannan Metals is expected to generate 2.57 times less return on investment than Aldebaran Resources. But when comparing it to its historical volatility, Hannan Metals is 1.03 times less risky than Aldebaran Resources. It trades about 0.17 of its potential returns per unit of risk. Aldebaran Resources is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Aldebaran Resources on August 29, 2024 and sell it today you would earn a total of 65.00 from holding Aldebaran Resources or generate 68.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Aldebaran Resources
Performance |
| Timeline |
| Hannan Metals |
| Aldebaran Resources |
Hannan Metals and Aldebaran Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Aldebaran Resources
The main advantage of trading using opposite Hannan Metals and Aldebaran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Aldebaran 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 Aldebaran Resources will offset losses from the drop in Aldebaran Resources' long position.| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
| Aldebaran Resources vs. Huntsman Exploration | Aldebaran Resources vs. Aurelia Metals Limited | Aldebaran Resources vs. Adriatic Metals PLC | Aldebaran Resources vs. American Helium |
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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