Correlation Between SportsHero and Raiden Resources
Can any of the company-specific risk be diversified away by investing in both SportsHero and Raiden Resources 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 SportsHero and Raiden Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SportsHero and Raiden Resources, you can compare the effects of market volatilities on SportsHero and Raiden Resources 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 SportsHero with a short position of Raiden Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SportsHero and Raiden Resources.
Diversification Opportunities for SportsHero and Raiden Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SportsHero and Raiden is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SportsHero and Raiden Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiden Resources and SportsHero 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 SportsHero are associated (or correlated) with Raiden Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiden Resources has no effect on the direction of SportsHero i.e., SportsHero and Raiden Resources go up and down completely randomly.
Pair Corralation between SportsHero and Raiden Resources
Assuming the 90 days trading horizon SportsHero is expected to generate 0.63 times more return on investment than Raiden Resources. However, SportsHero is 1.59 times less risky than Raiden Resources. It trades about 0.26 of its potential returns per unit of risk. Raiden Resources is currently generating about -0.37 per unit of risk. If you would invest 1.40 in SportsHero on August 31, 2024 and sell it today you would earn a total of 0.40 from holding SportsHero or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SportsHero vs. Raiden Resources
Performance |
| Timeline |
| SportsHero |
| Raiden Resources |
SportsHero and Raiden Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SportsHero and Raiden Resources
The main advantage of trading using opposite SportsHero and Raiden Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SportsHero position performs unexpectedly, Raiden Resources 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 Raiden Resources will offset losses from the drop in Raiden Resources' long position.| SportsHero vs. Aneka Tambang Tbk | SportsHero vs. Woolworths | SportsHero vs. Commonwealth Bank | SportsHero vs. BHP Group Limited |
| Raiden Resources vs. MotorCycle Holdings | Raiden Resources vs. Mayfield Childcare | Raiden Resources vs. EVE Health Group | Raiden Resources vs. Retail Food Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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