Correlation Between South32 and ImExHS
Can any of the company-specific risk be diversified away by investing in both South32 and ImExHS 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 South32 and ImExHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 and ImExHS, you can compare the effects of market volatilities on South32 and ImExHS 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 South32 with a short position of ImExHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and ImExHS.
Diversification Opportunities for South32 and ImExHS
Excellent diversification
The 3 months correlation between South32 and ImExHS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding South32 and ImExHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImExHS and South32 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 South32 are associated (or correlated) with ImExHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImExHS has no effect on the direction of South32 i.e., South32 and ImExHS go up and down completely randomly.
Pair Corralation between South32 and ImExHS
Assuming the 90 days trading horizon South32 is expected to generate 0.61 times more return on investment than ImExHS. However, South32 is 1.65 times less risky than ImExHS. It trades about 0.01 of its potential returns per unit of risk. ImExHS is currently generating about -0.02 per unit of risk. If you would invest 379.00 in South32 on August 31, 2024 and sell it today you would lose (7.00) from holding South32 or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.53% |
| Values | Daily Returns |
South32 vs. ImExHS
Performance |
| Timeline |
| South32 |
| ImExHS |
South32 and ImExHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and ImExHS
The main advantage of trading using opposite South32 and ImExHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, ImExHS 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 ImExHS will offset losses from the drop in ImExHS's long position.| South32 vs. Auctus Alternative Investments | South32 vs. Retail Food Group | South32 vs. Alternative Investment Trust | South32 vs. Diversified United Investment |
| ImExHS vs. Andean Silver Limited | ImExHS vs. Hotel Property Investments | ImExHS vs. Super Retail Group | ImExHS vs. Black Rock Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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