Correlation Between Regal Investment and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Regal Investment 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 Regal Investment and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Investment and Champion Iron, you can compare the effects of market volatilities on Regal Investment 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 Regal Investment with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and Champion Iron.
Diversification Opportunities for Regal Investment and Champion Iron
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Regal and Champion is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Regal Investment 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 Regal Investment 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 Regal Investment i.e., Regal Investment and Champion Iron go up and down completely randomly.
Pair Corralation between Regal Investment and Champion Iron
Assuming the 90 days trading horizon Regal Investment is expected to generate 0.58 times more return on investment than Champion Iron. However, Regal Investment is 1.73 times less risky than Champion Iron. It trades about 0.05 of its potential returns per unit of risk. Champion Iron is currently generating about 0.0 per unit of risk. If you would invest 260.00 in Regal Investment on September 3, 2024 and sell it today you would earn a total of 82.00 from holding Regal Investment or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Investment vs. Champion Iron
Performance |
| Timeline |
| Regal Investment |
| Champion Iron |
Regal Investment and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Investment and Champion Iron
The main advantage of trading using opposite Regal Investment and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment 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.| Regal Investment vs. ABACUS STORAGE KING | Regal Investment vs. Champion Iron | Regal Investment vs. iShares Global Healthcare | Regal Investment vs. Peel Mining |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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