Correlation Between Hawsons Iron and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Collins Foods 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 Hawsons Iron and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Collins Foods, you can compare the effects of market volatilities on Hawsons Iron and Collins Foods 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 Hawsons Iron with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Collins Foods.
Diversification Opportunities for Hawsons Iron and Collins Foods
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hawsons and Collins is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Hawsons Iron 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 Hawsons Iron are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Collins Foods go up and down completely randomly.
Pair Corralation between Hawsons Iron and Collins Foods
Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Collins Foods. In addition to that, Hawsons Iron is 4.79 times more volatile than Collins Foods. It trades about -0.06 of its total potential returns per unit of risk. Collins Foods is currently generating about -0.21 per unit of volatility. If you would invest 831.00 in Collins Foods on September 12, 2024 and sell it today you would lose (44.00) from holding Collins Foods or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Collins Foods
Performance |
| Timeline |
| Hawsons Iron |
| Collins Foods |
Hawsons Iron and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Collins Foods
The main advantage of trading using opposite Hawsons Iron and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Collins Foods vs. Homeco Daily Needs | Collins Foods vs. Australian Unity Office | Collins Foods vs. Farm Pride Foods | Collins Foods vs. Viva Leisure |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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