Correlation Between Stelar Metals and Australia United
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Australia United 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 Stelar Metals and Australia United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Australia United Mining, you can compare the effects of market volatilities on Stelar Metals and Australia United 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 Stelar Metals with a short position of Australia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Australia United.
Diversification Opportunities for Stelar Metals and Australia United
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stelar and Australia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Australia United Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia United Mining and Stelar 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 Stelar Metals are associated (or correlated) with Australia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia United Mining has no effect on the direction of Stelar Metals i.e., Stelar Metals and Australia United go up and down completely randomly.
Pair Corralation between Stelar Metals and Australia United
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the Australia United. But the stock apears to be less risky and, when comparing its historical volatility, Stelar Metals is 1.62 times less risky than Australia United. The stock trades about -0.08 of its potential returns per unit of risk. The Australia United Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Australia United Mining on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Australia United Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. Australia United Mining
Performance |
| Timeline |
| Stelar Metals |
| Australia United Mining |
Stelar Metals and Australia United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Australia United
The main advantage of trading using opposite Stelar Metals and Australia United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Australia United 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 Australia United will offset losses from the drop in Australia United's long position.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
| Australia United vs. Toys R Us | Australia United vs. Australian Agricultural | Australia United vs. MetalsGrove Mining | Australia United vs. Talisman Mining |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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