Correlation Between Red Hill and Anax Metals
Can any of the company-specific risk be diversified away by investing in both Red Hill and Anax 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 Red Hill and Anax Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Hill Iron and Anax Metals, you can compare the effects of market volatilities on Red Hill and Anax 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 Red Hill with a short position of Anax Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Anax Metals.
Diversification Opportunities for Red Hill and Anax Metals
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Red and Anax is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Anax Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anax Metals and Red Hill 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 Red Hill Iron are associated (or correlated) with Anax Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anax Metals has no effect on the direction of Red Hill i.e., Red Hill and Anax Metals go up and down completely randomly.
Pair Corralation between Red Hill and Anax Metals
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 0.45 times more return on investment than Anax Metals. However, Red Hill Iron is 2.2 times less risky than Anax Metals. It trades about 0.04 of its potential returns per unit of risk. Anax Metals is currently generating about -0.03 per unit of risk. If you would invest 292.00 in Red Hill Iron on September 5, 2024 and sell it today you would earn a total of 128.00 from holding Red Hill Iron or generate 43.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Red Hill Iron vs. Anax Metals
Performance |
| Timeline |
| Red Hill Iron |
| Anax Metals |
Red Hill and Anax Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Anax Metals
The main advantage of trading using opposite Red Hill and Anax Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Anax 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 Anax Metals will offset losses from the drop in Anax Metals' long position.| Red Hill vs. Northern Star Resources | Red Hill vs. Evolution Mining | Red Hill vs. Bluescope Steel | Red Hill vs. Sandfire Resources NL |
| Anax Metals vs. Ironbark Capital | Anax Metals vs. G8 Education | Anax Metals vs. Red Hill Iron | Anax Metals vs. Aussie Broadband |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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