Correlation Between IGO and Rock Tech
Can any of the company-specific risk be diversified away by investing in both IGO and Rock Tech 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 IGO and Rock Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Rock Tech Lithium, you can compare the effects of market volatilities on IGO and Rock Tech 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 IGO with a short position of Rock Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Rock Tech.
Diversification Opportunities for IGO and Rock Tech
Very good diversification
The 3 months correlation between IGO and Rock is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium and IGO 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 IGO Limited are associated (or correlated) with Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of IGO i.e., IGO and Rock Tech go up and down completely randomly.
Pair Corralation between IGO and Rock Tech
Assuming the 90 days horizon IGO Limited is expected to generate 0.45 times more return on investment than Rock Tech. However, IGO Limited is 2.22 times less risky than Rock Tech. It trades about 0.11 of its potential returns per unit of risk. Rock Tech Lithium is currently generating about -0.03 per unit of risk. If you would invest 609.00 in IGO Limited on September 12, 2024 and sell it today you would earn a total of 71.00 from holding IGO Limited or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Rock Tech Lithium
Performance |
| Timeline |
| IGO Limited |
| Rock Tech Lithium |
IGO and Rock Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Rock Tech
The main advantage of trading using opposite IGO and Rock Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Rock Tech 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 Rock Tech will offset losses from the drop in Rock Tech's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Rock Tech vs. Qubec Nickel Corp | Rock Tech vs. IGO Limited | Rock Tech vs. Focus Graphite | Rock Tech vs. Mineral Res |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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