Correlation Between Hannan Metals and NGEx Minerals
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and NGEx Minerals 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 NGEx Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and NGEx Minerals, you can compare the effects of market volatilities on Hannan Metals and NGEx Minerals 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 NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and NGEx Minerals.
Diversification Opportunities for Hannan Metals and NGEx Minerals
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hannan and NGEx is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Hannan Metals i.e., Hannan Metals and NGEx Minerals go up and down completely randomly.
Pair Corralation between Hannan Metals and NGEx Minerals
Assuming the 90 days horizon Hannan Metals is expected to generate 4.17 times more return on investment than NGEx Minerals. However, Hannan Metals is 4.17 times more volatile than NGEx Minerals. It trades about 0.12 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.15 per unit of risk. If you would invest 52.00 in Hannan Metals on December 2, 2024 and sell it today you would earn a total of 9.00 from holding Hannan Metals or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. NGEx Minerals
Performance |
| Timeline |
| Hannan Metals |
| NGEx Minerals |
Hannan Metals and NGEx Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and NGEx Minerals
The main advantage of trading using opposite Hannan Metals and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, NGEx Minerals 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 NGEx Minerals will offset losses from the drop in NGEx Minerals' long position.| Hannan Metals vs. Atco Mining | ||
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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