Correlation Between Imperial Metals and Hot Chili
Can any of the company-specific risk be diversified away by investing in both Imperial Metals and Hot Chili 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 Imperial Metals and Hot Chili into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Metals and Hot Chili Limited, you can compare the effects of market volatilities on Imperial Metals and Hot Chili 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 Imperial Metals with a short position of Hot Chili. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Hot Chili.
Diversification Opportunities for Imperial Metals and Hot Chili
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Imperial and Hot is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Hot Chili Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hot Chili Limited and Imperial 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 Imperial Metals are associated (or correlated) with Hot Chili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hot Chili Limited has no effect on the direction of Imperial Metals i.e., Imperial Metals and Hot Chili go up and down completely randomly.
Pair Corralation between Imperial Metals and Hot Chili
Assuming the 90 days horizon Imperial Metals is expected to generate 0.78 times more return on investment than Hot Chili. However, Imperial Metals is 1.28 times less risky than Hot Chili. It trades about 0.03 of its potential returns per unit of risk. Hot Chili Limited is currently generating about 0.01 per unit of risk. If you would invest 122.00 in Imperial Metals on September 5, 2024 and sell it today you would earn a total of 30.00 from holding Imperial Metals or generate 24.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Imperial Metals vs. Hot Chili Limited
Performance |
| Timeline |
| Imperial Metals |
| Hot Chili Limited |
Imperial Metals and Hot Chili Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Metals and Hot Chili
The main advantage of trading using opposite Imperial Metals and Hot Chili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Metals position performs unexpectedly, Hot Chili 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 Hot Chili will offset losses from the drop in Hot Chili's long position.| Imperial Metals vs. Advantage Solutions | Imperial Metals vs. Atlas Corp | Imperial Metals vs. PureCycle Technologies | Imperial Metals vs. WM Technology |
| Hot Chili vs. Copper Fox Metals | Hot Chili vs. Imperial Metals | Hot Chili vs. Bell Copper | Hot Chili vs. Dor Copper Mining |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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