Correlation Between THRACE PLASTICS and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and Fortescue 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 THRACE PLASTICS and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Fortescue Metals Group, you can compare the effects of market volatilities on THRACE PLASTICS and Fortescue 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 THRACE PLASTICS with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Fortescue Metals.
Diversification Opportunities for THRACE PLASTICS and Fortescue Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THRACE and Fortescue is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Fortescue Metals go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Fortescue Metals
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 1.44 times less return on investment than Fortescue Metals. But when comparing it to its historical volatility, THRACE PLASTICS is 1.17 times less risky than Fortescue Metals. It trades about 0.12 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,103 in Fortescue Metals Group on November 7, 2024 and sell it today you would earn a total of 57.00 from holding Fortescue Metals Group or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. Fortescue Metals Group
Performance |
| Timeline |
| THRACE PLASTICS |
| Fortescue Metals |
THRACE PLASTICS and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Fortescue Metals
The main advantage of trading using opposite THRACE PLASTICS and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS position performs unexpectedly, Fortescue 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| THRACE PLASTICS vs. Salesforce | THRACE PLASTICS vs. Tyson Foods | THRACE PLASTICS vs. Carnegie Clean Energy | THRACE PLASTICS vs. GungHo Online Entertainment |
| Fortescue Metals vs. Transport International Holdings | Fortescue Metals vs. Broadcom | Fortescue Metals vs. NAGOYA RAILROAD | Fortescue Metals vs. VARIOUS EATERIES LS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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