Correlation Between Hawsons Iron and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Stelar Metals 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 Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Stelar Metals, you can compare the effects of market volatilities on Hawsons Iron and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Stelar Metals.
Diversification Opportunities for Hawsons Iron and Stelar Metals
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hawsons and Stelar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Stelar Metals go up and down completely randomly.
Pair Corralation between Hawsons Iron and Stelar Metals
Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Stelar Metals. But the stock apears to be less risky and, when comparing its historical volatility, Hawsons Iron is 1.11 times less risky than Stelar Metals. The stock trades about -0.05 of its potential returns per unit of risk. The Stelar Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Stelar Metals on August 30, 2024 and sell it today you would lose (7.50) from holding Stelar Metals or give up 53.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Stelar Metals
Performance |
| Timeline |
| Hawsons Iron |
| Stelar Metals |
Hawsons Iron and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Stelar Metals
The main advantage of trading using opposite Hawsons Iron and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Hawsons Iron vs. Richmond Vanadium Technology | Hawsons Iron vs. Computershare | Hawsons Iron vs. Westpac Banking | Hawsons Iron vs. Macquarie Bank Limited |
| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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