Correlation Between Sky Metals and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Hammer 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 Sky Metals and Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Hammer Metals, you can compare the effects of market volatilities on Sky Metals and Hammer 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 Sky Metals with a short position of Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Hammer Metals.
Diversification Opportunities for Sky Metals and Hammer Metals
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sky and Hammer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Sky Metals i.e., Sky Metals and Hammer Metals go up and down completely randomly.
Pair Corralation between Sky Metals and Hammer Metals
Assuming the 90 days trading horizon Sky Metals is expected to generate 3.91 times less return on investment than Hammer Metals. But when comparing it to its historical volatility, Sky Metals is 2.77 times less risky than Hammer Metals. It trades about 0.06 of its potential returns per unit of risk. Hammer Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Hammer Metals on October 21, 2024 and sell it today you would earn a total of 0.20 from holding Hammer Metals or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Metals vs. Hammer Metals
Performance |
| Timeline |
| Sky Metals |
| Hammer Metals |
Sky Metals and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Hammer Metals
The main advantage of trading using opposite Sky Metals and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Hammer 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Sky Metals vs. Platinum Asset Management | Sky Metals vs. Neurotech International | Sky Metals vs. Dicker Data | Sky Metals vs. Australian Strategic Materials |
| Hammer Metals vs. Ainsworth Game Technology | Hammer Metals vs. Autosports Group | Hammer Metals vs. Computershare | Hammer Metals vs. oOhMedia |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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