Correlation Between Horseshoe Metals and Global Health
Can any of the company-specific risk be diversified away by investing in both Horseshoe Metals and Global Health 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 Horseshoe Metals and Global Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horseshoe Metals and Global Health, you can compare the effects of market volatilities on Horseshoe Metals and Global Health 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 Horseshoe Metals with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horseshoe Metals and Global Health.
Diversification Opportunities for Horseshoe Metals and Global Health
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Horseshoe and Global is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Horseshoe Metals and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and Horseshoe 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 Horseshoe Metals are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Horseshoe Metals i.e., Horseshoe Metals and Global Health go up and down completely randomly.
Pair Corralation between Horseshoe Metals and Global Health
Assuming the 90 days trading horizon Horseshoe Metals is expected to generate 2.38 times more return on investment than Global Health. However, Horseshoe Metals is 2.38 times more volatile than Global Health. It trades about 0.06 of its potential returns per unit of risk. Global Health is currently generating about 0.01 per unit of risk. If you would invest 1.00 in Horseshoe Metals on September 4, 2024 and sell it today you would earn a total of 0.10 from holding Horseshoe Metals or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horseshoe Metals vs. Global Health
Performance |
| Timeline |
| Horseshoe Metals |
| Global Health |
Horseshoe Metals and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horseshoe Metals and Global Health
The main advantage of trading using opposite Horseshoe Metals and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horseshoe Metals position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.| Horseshoe Metals vs. Northern Star Resources | Horseshoe Metals vs. Evolution Mining | Horseshoe Metals vs. Bluescope Steel | Horseshoe Metals vs. Sandfire Resources NL |
| Global Health vs. Aneka Tambang Tbk | Global Health vs. BHP Group Limited | Global Health vs. Commonwealth Bank of | Global Health vs. Commonwealth Bank of |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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