Correlation Between Legacy Iron and Change Financial
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Change Financial 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 Legacy Iron and Change Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Iron Ore and Change Financial Limited, you can compare the effects of market volatilities on Legacy Iron and Change Financial 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 Legacy Iron with a short position of Change Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Change Financial.
Diversification Opportunities for Legacy Iron and Change Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legacy and Change is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Change Financial Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Change Financial and Legacy Iron 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 Legacy Iron Ore are associated (or correlated) with Change Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Change Financial has no effect on the direction of Legacy Iron i.e., Legacy Iron and Change Financial go up and down completely randomly.
Pair Corralation between Legacy Iron and Change Financial
If you would invest 6.20 in Change Financial Limited on November 6, 2024 and sell it today you would earn a total of 1.00 from holding Change Financial Limited or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Change Financial Limited
Performance |
| Timeline |
| Legacy Iron Ore |
| Change Financial |
Legacy Iron and Change Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Change Financial
The main advantage of trading using opposite Legacy Iron and Change Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Change Financial 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 Change Financial will offset losses from the drop in Change Financial's long position.| Legacy Iron vs. Cosmo Metals | Legacy Iron vs. Lykos Metals | Legacy Iron vs. Technology One | Legacy Iron vs. Hutchison Telecommunications |
| Change Financial vs. Navigator Global Investments | Change Financial vs. Argo Investments | Change Financial vs. EROAD | Change Financial vs. Mirrabooka Investments |
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 Correlations module to find global opportunities by holding instruments from different markets.
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