Correlation Between Mount Gibson and Bisalloy Steel
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and Bisalloy Steel 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 Mount Gibson and Bisalloy Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Bisalloy Steel Group, you can compare the effects of market volatilities on Mount Gibson and Bisalloy Steel 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 Mount Gibson with a short position of Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Bisalloy Steel.
Diversification Opportunities for Mount Gibson and Bisalloy Steel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mount and Bisalloy is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Mount Gibson i.e., Mount Gibson and Bisalloy Steel go up and down completely randomly.
Pair Corralation between Mount Gibson and Bisalloy Steel
Assuming the 90 days trading horizon Mount Gibson Iron is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Mount Gibson Iron is 1.01 times less risky than Bisalloy Steel. The stock trades about -0.02 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 182.00 in Bisalloy Steel Group on August 25, 2024 and sell it today you would earn a total of 212.00 from holding Bisalloy Steel Group or generate 116.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Bisalloy Steel Group
Performance |
| Timeline |
| Mount Gibson Iron |
| Bisalloy Steel Group |
Mount Gibson and Bisalloy Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Bisalloy Steel
The main advantage of trading using opposite Mount Gibson and Bisalloy Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, Bisalloy Steel 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 Bisalloy Steel will offset losses from the drop in Bisalloy Steel's long position.| Mount Gibson vs. Bisalloy Steel Group | Mount Gibson vs. AiMedia Technologies | Mount Gibson vs. Skycity Entertainment Group | Mount Gibson vs. Red Hill Iron |
| Bisalloy Steel vs. Northern Star Resources | Bisalloy Steel vs. Evolution Mining | Bisalloy Steel vs. Bluescope Steel | Bisalloy Steel vs. Sandfire Resources NL |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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