Correlation Between Hawsons Iron and Red Hill
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Red Hill 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 Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Red Hill Iron, you can compare the effects of market volatilities on Hawsons Iron and Red Hill 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 Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Red Hill.
Diversification Opportunities for Hawsons Iron and Red Hill
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hawsons and Red is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron 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 Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Red Hill go up and down completely randomly.
Pair Corralation between Hawsons Iron and Red Hill
Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Red Hill. In addition to that, Hawsons Iron is 1.53 times more volatile than Red Hill Iron. It trades about -0.04 of its total potential returns per unit of risk. Red Hill Iron is currently generating about -0.03 per unit of volatility. If you would invest 486.00 in Red Hill Iron on September 1, 2024 and sell it today you would lose (81.00) from holding Red Hill Iron or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Red Hill Iron
Performance |
| Timeline |
| Hawsons Iron |
| Red Hill Iron |
Hawsons Iron and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Red Hill
The main advantage of trading using opposite Hawsons Iron and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill's long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Red Hill vs. Northern Star Resources | Red Hill vs. Evolution Mining | Red Hill vs. Bluescope Steel | Red Hill vs. Sandfire Resources NL |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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