Correlation Between Northern Graphite and Hannan Metals
Can any of the company-specific risk be diversified away by investing in both Northern Graphite and Hannan Metals 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 Northern Graphite and Hannan Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Graphite and Hannan Metals, you can compare the effects of market volatilities on Northern Graphite and Hannan Metals 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 Northern Graphite with a short position of Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Graphite and Hannan Metals.
Diversification Opportunities for Northern Graphite and Hannan Metals
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northern and Hannan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and Northern Graphite 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 Northern Graphite are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of Northern Graphite i.e., Northern Graphite and Hannan Metals go up and down completely randomly.
Pair Corralation between Northern Graphite and Hannan Metals
Assuming the 90 days horizon Northern Graphite is expected to generate 1.67 times less return on investment than Hannan Metals. But when comparing it to its historical volatility, Northern Graphite is 1.08 times less risky than Hannan Metals. It trades about 0.14 of its potential returns per unit of risk. Hannan Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Hannan Metals on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Hannan Metals or generate 24.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Graphite vs. Hannan Metals
Performance |
| Timeline |
| Northern Graphite |
| Hannan Metals |
Northern Graphite and Hannan Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Graphite and Hannan Metals
The main advantage of trading using opposite Northern Graphite and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite position performs unexpectedly, Hannan Metals 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
| Hannan Metals vs. Algoma Steel Group | Hannan Metals vs. Champion Iron | Hannan Metals vs. International Zeolite Corp | Hannan Metals vs. European Residential Real |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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