Correlation Between KOMATSU and IRONBARK ZINC
Can any of the company-specific risk be diversified away by investing in both KOMATSU and IRONBARK ZINC 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 KOMATSU and IRONBARK ZINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KOMATSU LTD SPONS and IRONBARK ZINC, you can compare the effects of market volatilities on KOMATSU and IRONBARK ZINC 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 KOMATSU with a short position of IRONBARK ZINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOMATSU and IRONBARK ZINC.
Diversification Opportunities for KOMATSU and IRONBARK ZINC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KOMATSU and IRONBARK is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding KOMATSU LTD SPONS and IRONBARK ZINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRONBARK ZINC and KOMATSU 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 KOMATSU LTD SPONS are associated (or correlated) with IRONBARK ZINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRONBARK ZINC has no effect on the direction of KOMATSU i.e., KOMATSU and IRONBARK ZINC go up and down completely randomly.
Pair Corralation between KOMATSU and IRONBARK ZINC
If you would invest 2,380 in KOMATSU LTD SPONS on October 1, 2024 and sell it today you would earn a total of 220.00 from holding KOMATSU LTD SPONS or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.5% |
| Values | Daily Returns |
KOMATSU LTD SPONS vs. IRONBARK ZINC
Performance |
| Timeline |
| KOMATSU LTD SPONS |
| IRONBARK ZINC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
KOMATSU and IRONBARK ZINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOMATSU and IRONBARK ZINC
The main advantage of trading using opposite KOMATSU and IRONBARK ZINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOMATSU position performs unexpectedly, IRONBARK ZINC 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 IRONBARK ZINC will offset losses from the drop in IRONBARK ZINC's long position.The idea behind KOMATSU LTD SPONS and IRONBARK ZINC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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