Correlation Between Itech Minerals and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Itech Minerals and ACDC Metals 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 Itech Minerals and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itech Minerals and ACDC Metals, you can compare the effects of market volatilities on Itech Minerals and ACDC Metals 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 Itech Minerals with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itech Minerals and ACDC Metals.
Diversification Opportunities for Itech Minerals and ACDC Metals
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Itech and ACDC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Itech Minerals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Itech Minerals 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 Itech Minerals are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Itech Minerals i.e., Itech Minerals and ACDC Metals go up and down completely randomly.
Pair Corralation between Itech Minerals and ACDC Metals
Assuming the 90 days trading horizon Itech Minerals is expected to under-perform the ACDC Metals. In addition to that, Itech Minerals is 1.01 times more volatile than ACDC Metals. It trades about -0.04 of its total potential returns per unit of risk. ACDC Metals is currently generating about -0.03 per unit of volatility. If you would invest 20.00 in ACDC Metals on September 14, 2024 and sell it today you would lose (14.10) from holding ACDC Metals or give up 70.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.39% |
| Values | Daily Returns |
Itech Minerals vs. ACDC Metals
Performance |
| Timeline |
| Itech Minerals |
| ACDC Metals |
Itech Minerals and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itech Minerals and ACDC Metals
The main advantage of trading using opposite Itech Minerals and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itech Minerals position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Itech Minerals vs. Northern Star Resources | Itech Minerals vs. Evolution Mining | Itech Minerals vs. Bluescope Steel | Itech Minerals vs. Sandfire Resources NL |
| ACDC Metals vs. Centuria Industrial Reit | ACDC Metals vs. Global Data Centre | ACDC Metals vs. Mayfield Childcare | ACDC Metals vs. Aurelia Metals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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