Correlation Between Hannan Metals and SPC Nickel
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and SPC Nickel 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 SPC Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and SPC Nickel Corp, you can compare the effects of market volatilities on Hannan Metals and SPC Nickel 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 SPC Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and SPC Nickel.
Diversification Opportunities for Hannan Metals and SPC Nickel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hannan and SPC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and SPC Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPC Nickel Corp 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 SPC Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPC Nickel Corp has no effect on the direction of Hannan Metals i.e., Hannan Metals and SPC Nickel go up and down completely randomly.
Pair Corralation between Hannan Metals and SPC Nickel
Assuming the 90 days horizon Hannan Metals is expected to generate 0.75 times more return on investment than SPC Nickel. However, Hannan Metals is 1.34 times less risky than SPC Nickel. It trades about 0.28 of its potential returns per unit of risk. SPC Nickel Corp is currently generating about -0.31 per unit of risk. If you would invest 32.00 in Hannan Metals on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Hannan Metals or generate 34.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hannan Metals vs. SPC Nickel Corp
Performance |
| Timeline |
| Hannan Metals |
| SPC Nickel Corp |
Hannan Metals and SPC Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and SPC Nickel
The main advantage of trading using opposite Hannan Metals and SPC Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, SPC Nickel 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 SPC Nickel will offset losses from the drop in SPC Nickel'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 |
| SPC Nickel vs. ATT Inc | SPC Nickel vs. Merck Company | SPC Nickel vs. Walt Disney | SPC Nickel vs. Caterpillar |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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