Correlation Between South32 and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both South32 and Cornish 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 South32 and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and Cornish Metals, you can compare the effects of market volatilities on South32 and Cornish 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 South32 with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Cornish Metals.
Diversification Opportunities for South32 and Cornish Metals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between South32 and Cornish is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Limited are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of South32 i.e., South32 and Cornish Metals go up and down completely randomly.
Pair Corralation between South32 and Cornish Metals
Assuming the 90 days horizon South32 is expected to generate 5.2 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, South32 Limited is 4.07 times less risky than Cornish Metals. It trades about 0.04 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Cornish Metals on September 3, 2024 and sell it today you would lose (4.00) from holding Cornish Metals or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.06% |
| Values | Daily Returns |
South32 Limited vs. Cornish Metals
Performance |
| Timeline |
| South32 Limited |
| Cornish Metals |
South32 and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Cornish Metals
The main advantage of trading using opposite South32 and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Cornish 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
| Cornish Metals vs. Advantage Solutions | Cornish Metals vs. Atlas Corp | Cornish Metals vs. PureCycle Technologies | Cornish Metals vs. WM Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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