Correlation Between CHAMPION IRON and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both CHAMPION IRON and INSURANCE AUST 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 CHAMPION IRON and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAMPION IRON and INSURANCE AUST GRP, you can compare the effects of market volatilities on CHAMPION IRON and INSURANCE AUST 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 CHAMPION IRON with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION IRON and INSURANCE AUST.
Diversification Opportunities for CHAMPION IRON and INSURANCE AUST
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHAMPION and INSURANCE is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and CHAMPION 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 CHAMPION IRON are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of CHAMPION IRON i.e., CHAMPION IRON and INSURANCE AUST go up and down completely randomly.
Pair Corralation between CHAMPION IRON and INSURANCE AUST
Assuming the 90 days trading horizon CHAMPION IRON is expected to under-perform the INSURANCE AUST. In addition to that, CHAMPION IRON is 2.18 times more volatile than INSURANCE AUST GRP. It trades about -0.13 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.26 per unit of volatility. If you would invest 510.00 in INSURANCE AUST GRP on November 5, 2024 and sell it today you would earn a total of 35.00 from holding INSURANCE AUST GRP or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHAMPION IRON vs. INSURANCE AUST GRP
Performance |
| Timeline |
| CHAMPION IRON |
| INSURANCE AUST GRP |
CHAMPION IRON and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION IRON and INSURANCE AUST
The main advantage of trading using opposite CHAMPION IRON and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION IRON position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| CHAMPION IRON vs. Air Transport Services | CHAMPION IRON vs. AEON METALS LTD | CHAMPION IRON vs. Fortescue Metals Group | CHAMPION IRON vs. GREENX METALS LTD |
| INSURANCE AUST vs. AIR PRODCHEMICALS | INSURANCE AUST vs. Mitsui Chemicals | INSURANCE AUST vs. X FAB Silicon Foundries | INSURANCE AUST vs. Mitsubishi Gas Chemical |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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