Correlation Between Petra Diamonds and Cartier Iron
Can any of the company-specific risk be diversified away by investing in both Petra Diamonds and Cartier Iron 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 Petra Diamonds and Cartier Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petra Diamonds Limited and Cartier Iron Corp, you can compare the effects of market volatilities on Petra Diamonds and Cartier Iron 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 Petra Diamonds with a short position of Cartier Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petra Diamonds and Cartier Iron.
Diversification Opportunities for Petra Diamonds and Cartier Iron
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petra and Cartier is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Petra Diamonds Limited and Cartier Iron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Iron Corp and Petra Diamonds 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 Petra Diamonds Limited are associated (or correlated) with Cartier Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Iron Corp has no effect on the direction of Petra Diamonds i.e., Petra Diamonds and Cartier Iron go up and down completely randomly.
Pair Corralation between Petra Diamonds and Cartier Iron
Assuming the 90 days horizon Petra Diamonds Limited is expected to under-perform the Cartier Iron. But the pink sheet apears to be less risky and, when comparing its historical volatility, Petra Diamonds Limited is 2.45 times less risky than Cartier Iron. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Cartier Iron Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4.04 in Cartier Iron Corp on September 2, 2024 and sell it today you would earn a total of 1.46 from holding Cartier Iron Corp or generate 36.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petra Diamonds Limited vs. Cartier Iron Corp
Performance |
| Timeline |
| Petra Diamonds |
| Cartier Iron Corp |
Petra Diamonds and Cartier Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petra Diamonds and Cartier Iron
The main advantage of trading using opposite Petra Diamonds and Cartier Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petra Diamonds position performs unexpectedly, Cartier Iron 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 Cartier Iron will offset losses from the drop in Cartier Iron's long position.| Petra Diamonds vs. Northam Platinum Holdings | Petra Diamonds vs. Clifton Mining Co | Petra Diamonds vs. Cartier Iron Corp | Petra Diamonds vs. Alien Metals |
| Cartier Iron vs. Sun Life Financial | Cartier Iron vs. 51Talk Online Education | Cartier Iron vs. Nexstar Broadcasting Group | Cartier Iron vs. Pekin Life Insurance |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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