Correlation Between Hannan Metals and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Leading Edge 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 Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Leading Edge Materials, you can compare the effects of market volatilities on Hannan Metals and Leading Edge 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 Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Leading Edge.
Diversification Opportunities for Hannan Metals and Leading Edge
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hannan and Leading is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials 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 Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Hannan Metals i.e., Hannan Metals and Leading Edge go up and down completely randomly.
Pair Corralation between Hannan Metals and Leading Edge
Assuming the 90 days horizon Hannan Metals is expected to generate 1.08 times more return on investment than Leading Edge. However, Hannan Metals is 1.08 times more volatile than Leading Edge Materials. It trades about 0.17 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.04 per unit of risk. If you would invest 35.00 in Hannan Metals on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Hannan Metals or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hannan Metals vs. Leading Edge Materials
Performance |
| Timeline |
| Hannan Metals |
| Leading Edge Materials |
Hannan Metals and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Leading Edge
The main advantage of trading using opposite Hannan Metals and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
| Leading Edge vs. Grid Metals Corp | Leading Edge vs. Fireweed Zinc | Leading Edge vs. First American Silver | Leading Edge vs. Australian Strategic Materials |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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