Correlation Between Hammer Metals and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Hammer Metals and Aristocrat Leisure 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 Hammer Metals and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hammer Metals and Aristocrat Leisure, you can compare the effects of market volatilities on Hammer Metals and Aristocrat Leisure 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 Hammer Metals with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hammer Metals and Aristocrat Leisure.
Diversification Opportunities for Hammer Metals and Aristocrat Leisure
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hammer and Aristocrat is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hammer Metals and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Hammer 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 Hammer Metals are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Hammer Metals i.e., Hammer Metals and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Hammer Metals and Aristocrat Leisure
Assuming the 90 days trading horizon Hammer Metals is expected to under-perform the Aristocrat Leisure. In addition to that, Hammer Metals is 3.62 times more volatile than Aristocrat Leisure. It trades about 0.0 of its total potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.15 per unit of volatility. If you would invest 4,023 in Aristocrat Leisure on October 16, 2024 and sell it today you would earn a total of 3,051 from holding Aristocrat Leisure or generate 75.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hammer Metals vs. Aristocrat Leisure
Performance |
| Timeline |
| Hammer Metals |
| Aristocrat Leisure |
Hammer Metals and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hammer Metals and Aristocrat Leisure
The main advantage of trading using opposite Hammer Metals and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hammer Metals position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Hammer Metals vs. Commonwealth Bank of | Hammer Metals vs. Credit Clear | Hammer Metals vs. Magellan Financial Group | Hammer Metals vs. Aurelia Metals |
| Aristocrat Leisure vs. Hammer Metals | Aristocrat Leisure vs. Ras Technology Holdings | Aristocrat Leisure vs. Carawine Resources Limited | Aristocrat Leisure vs. Ambertech |
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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