Correlation Between Hawsons Iron and Genetic Technologies
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Genetic Technologies 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 Genetic Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Genetic Technologies, you can compare the effects of market volatilities on Hawsons Iron and Genetic Technologies 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 Genetic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Genetic Technologies.
Diversification Opportunities for Hawsons Iron and Genetic Technologies
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hawsons and Genetic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Genetic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetic Technologies 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 Genetic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetic Technologies has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Genetic Technologies go up and down completely randomly.
Pair Corralation between Hawsons Iron and Genetic Technologies
Assuming the 90 days trading horizon Hawsons Iron is expected to generate 0.82 times more return on investment than Genetic Technologies. However, Hawsons Iron is 1.22 times less risky than Genetic Technologies. It trades about -0.04 of its potential returns per unit of risk. Genetic Technologies is currently generating about -0.11 per unit of risk. If you would invest 3.00 in Hawsons Iron on September 1, 2024 and sell it today you would lose (1.00) from holding Hawsons Iron or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.5% |
| Values | Daily Returns |
Hawsons Iron vs. Genetic Technologies
Performance |
| Timeline |
| Hawsons Iron |
| Genetic Technologies |
Hawsons Iron and Genetic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Genetic Technologies
The main advantage of trading using opposite Hawsons Iron and Genetic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Genetic Technologies 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 Genetic Technologies will offset losses from the drop in Genetic Technologies' long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Genetic Technologies vs. Energy Resources | Genetic Technologies vs. 88 Energy | Genetic Technologies vs. Amani Gold | Genetic Technologies vs. A1 Investments Resources |
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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