Correlation Between MotorCycle Holdings and Summit Resources
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings and Summit Resources 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 MotorCycle Holdings and Summit Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Summit Resources Limited, you can compare the effects of market volatilities on MotorCycle Holdings and Summit Resources 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 MotorCycle Holdings with a short position of Summit Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Summit Resources.
Diversification Opportunities for MotorCycle Holdings and Summit Resources
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MotorCycle and Summit is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources and MotorCycle Holdings 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 MotorCycle Holdings are associated (or correlated) with Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Summit Resources go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Summit Resources
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 0.1 times more return on investment than Summit Resources. However, MotorCycle Holdings is 10.07 times less risky than Summit Resources. It trades about -0.08 of its potential returns per unit of risk. Summit Resources Limited is currently generating about -0.09 per unit of risk. If you would invest 162.00 in MotorCycle Holdings on August 29, 2024 and sell it today you would lose (3.00) from holding MotorCycle Holdings or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MotorCycle Holdings vs. Summit Resources Limited
Performance |
| Timeline |
| MotorCycle Holdings |
| Summit Resources |
MotorCycle Holdings and Summit Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Summit Resources
The main advantage of trading using opposite MotorCycle Holdings and Summit Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings position performs unexpectedly, Summit Resources 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 Summit Resources will offset losses from the drop in Summit Resources' long position.| MotorCycle Holdings vs. Summit Resources Limited | MotorCycle Holdings vs. Champion Iron | MotorCycle Holdings vs. Ridley | MotorCycle Holdings vs. Peel Mining |
| Summit Resources vs. Northern Star Resources | Summit Resources vs. Evolution Mining | Summit Resources vs. Bluescope Steel | Summit Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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