Correlation Between Profound Medical and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Profound Medical and Champion 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 Profound Medical and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and Champion Iron, you can compare the effects of market volatilities on Profound Medical and Champion 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 Profound Medical with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Champion Iron.
Diversification Opportunities for Profound Medical and Champion Iron
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Profound and Champion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Profound Medical 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 Profound Medical Corp are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Profound Medical i.e., Profound Medical and Champion Iron go up and down completely randomly.
Pair Corralation between Profound Medical and Champion Iron
Assuming the 90 days trading horizon Profound Medical Corp is expected to under-perform the Champion Iron. In addition to that, Profound Medical is 1.48 times more volatile than Champion Iron. It trades about -0.01 of its total potential returns per unit of risk. Champion Iron is currently generating about -0.01 per unit of volatility. If you would invest 664.00 in Champion Iron on October 12, 2024 and sell it today you would lose (159.00) from holding Champion Iron or give up 23.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profound Medical Corp vs. Champion Iron
Performance |
| Timeline |
| Profound Medical Corp |
| Champion Iron |
Profound Medical and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Champion Iron
The main advantage of trading using opposite Profound Medical and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, Champion 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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