Correlation Between Stelar Metals and Paladin Energy
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Paladin Energy 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 Paladin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Paladin Energy, you can compare the effects of market volatilities on Stelar Metals and Paladin Energy 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 Paladin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Paladin Energy.
Diversification Opportunities for Stelar Metals and Paladin Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stelar and Paladin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Paladin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paladin Energy 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 Paladin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paladin Energy has no effect on the direction of Stelar Metals i.e., Stelar Metals and Paladin Energy go up and down completely randomly.
Pair Corralation between Stelar Metals and Paladin Energy
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the Paladin Energy. But the stock apears to be less risky and, when comparing its historical volatility, Stelar Metals is 1.24 times less risky than Paladin Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Paladin Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 865.00 in Paladin Energy on September 4, 2024 and sell it today you would lose (87.00) from holding Paladin Energy or give up 10.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Stelar Metals vs. Paladin Energy
Performance |
| Timeline |
| Stelar Metals |
| Paladin Energy |
Stelar Metals and Paladin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Paladin Energy
The main advantage of trading using opposite Stelar Metals and Paladin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Paladin Energy 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 Paladin Energy will offset losses from the drop in Paladin Energy'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 |
| Paladin Energy vs. Beston Global Food | Paladin Energy vs. AiMedia Technologies | Paladin Energy vs. Seven West Media | Paladin Energy vs. Stelar Metals |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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