Correlation Between Sky Metals and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Austchina Holdings 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 Sky Metals and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Austchina Holdings, you can compare the effects of market volatilities on Sky Metals and Austchina Holdings 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 Sky Metals with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Austchina Holdings.
Diversification Opportunities for Sky Metals and Austchina Holdings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sky and Austchina is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Sky Metals 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 Sky Metals are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Sky Metals i.e., Sky Metals and Austchina Holdings go up and down completely randomly.
Pair Corralation between Sky Metals and Austchina Holdings
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.04 times less return on investment than Austchina Holdings. But when comparing it to its historical volatility, Sky Metals is 2.47 times less risky than Austchina Holdings. It trades about 0.03 of its potential returns per unit of risk. Austchina Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Austchina Holdings on September 12, 2024 and sell it today you would lose (0.40) from holding Austchina Holdings or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.51% |
| Values | Daily Returns |
Sky Metals vs. Austchina Holdings
Performance |
| Timeline |
| Sky Metals |
| Austchina Holdings |
Sky Metals and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Austchina Holdings
The main advantage of trading using opposite Sky Metals and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Sky Metals vs. Mount Gibson Iron | Sky Metals vs. Medical Developments International | Sky Metals vs. Legacy Iron Ore | Sky Metals vs. Kkr Credit Income |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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