Correlation Between Iluka Resources and COAST ENTERTAINMENT
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and COAST ENTERTAINMENT 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 Iluka Resources and COAST ENTERTAINMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and COAST ENTERTAINMENT HOLDINGS, you can compare the effects of market volatilities on Iluka Resources and COAST ENTERTAINMENT 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 Iluka Resources with a short position of COAST ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and COAST ENTERTAINMENT.
Diversification Opportunities for Iluka Resources and COAST ENTERTAINMENT
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iluka and COAST is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and COAST ENTERTAINMENT HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COAST ENTERTAINMENT and Iluka Resources 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 Iluka Resources are associated (or correlated) with COAST ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COAST ENTERTAINMENT has no effect on the direction of Iluka Resources i.e., Iluka Resources and COAST ENTERTAINMENT go up and down completely randomly.
Pair Corralation between Iluka Resources and COAST ENTERTAINMENT
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the COAST ENTERTAINMENT. But the stock apears to be less risky and, when comparing its historical volatility, Iluka Resources is 1.2 times less risky than COAST ENTERTAINMENT. The stock trades about -0.05 of its potential returns per unit of risk. The COAST ENTERTAINMENT HOLDINGS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 60.00 in COAST ENTERTAINMENT HOLDINGS on August 26, 2024 and sell it today you would lose (16.00) from holding COAST ENTERTAINMENT HOLDINGS or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. COAST ENTERTAINMENT HOLDINGS
Performance |
| Timeline |
| Iluka Resources |
| COAST ENTERTAINMENT |
Iluka Resources and COAST ENTERTAINMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and COAST ENTERTAINMENT
The main advantage of trading using opposite Iluka Resources and COAST ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, COAST ENTERTAINMENT 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 COAST ENTERTAINMENT will offset losses from the drop in COAST ENTERTAINMENT's long position.| Iluka Resources vs. Retail Food Group | Iluka Resources vs. Perseus Mining | Iluka Resources vs. Kingsrose Mining | Iluka Resources vs. Andean Silver Limited |
| COAST ENTERTAINMENT vs. Viva Leisure | COAST ENTERTAINMENT vs. Toys R Us | COAST ENTERTAINMENT vs. Westpac Banking | COAST ENTERTAINMENT vs. Origin Energy |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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