Correlation Between Sky Metals and Oceania Healthcare
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Oceania Healthcare 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 Oceania Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Oceania Healthcare, you can compare the effects of market volatilities on Sky Metals and Oceania Healthcare 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 Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Oceania Healthcare.
Diversification Opportunities for Sky Metals and Oceania Healthcare
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sky and Oceania is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare 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 Oceania Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceania Healthcare has no effect on the direction of Sky Metals i.e., Sky Metals and Oceania Healthcare go up and down completely randomly.
Pair Corralation between Sky Metals and Oceania Healthcare
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.66 times more return on investment than Oceania Healthcare. However, Sky Metals is 1.66 times more volatile than Oceania Healthcare. It trades about 0.05 of its potential returns per unit of risk. Oceania Healthcare is currently generating about 0.01 per unit of risk. If you would invest 3.60 in Sky Metals on September 2, 2024 and sell it today you would earn a total of 1.50 from holding Sky Metals or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Metals vs. Oceania Healthcare
Performance |
| Timeline |
| Sky Metals |
| Oceania Healthcare |
Sky Metals and Oceania Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Oceania Healthcare
The main advantage of trading using opposite Sky Metals and Oceania Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Oceania Healthcare 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 Oceania Healthcare will offset losses from the drop in Oceania Healthcare's long position.| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Sandfire Resources NL |
| Oceania Healthcare vs. Westpac Banking | Oceania Healthcare vs. iShares Global Healthcare | Oceania Healthcare vs. Australian Dairy Farms | Oceania Healthcare vs. Adriatic Metals Plc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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