Correlation Between IGO and South Star
Can any of the company-specific risk be diversified away by investing in both IGO and South Star 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 South Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and South Star Battery, you can compare the effects of market volatilities on IGO and South Star 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 South Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and South Star.
Diversification Opportunities for IGO and South Star
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGO and South is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery 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 South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of IGO i.e., IGO and South Star go up and down completely randomly.
Pair Corralation between IGO and South Star
Assuming the 90 days horizon IGO Limited is expected to generate 0.11 times more return on investment than South Star. However, IGO Limited is 8.89 times less risky than South Star. It trades about -0.22 of its potential returns per unit of risk. South Star Battery is currently generating about -0.04 per unit of risk. If you would invest 601.00 in IGO Limited on November 2, 2024 and sell it today you would lose (28.00) from holding IGO Limited or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
IGO Limited vs. South Star Battery
Performance |
| Timeline |
| IGO Limited |
| South Star Battery |
IGO and South Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and South Star
The main advantage of trading using opposite IGO and South Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, South Star 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 South Star will offset losses from the drop in South Star's long position.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Rockridge Resources |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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