Correlation Between Tristar Gold and Hannan Metals

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Can any of the company-specific risk be diversified away by investing in both Tristar Gold and Hannan 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 Tristar Gold and Hannan Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tristar Gold and Hannan Metals, you can compare the effects of market volatilities on Tristar Gold and Hannan 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 Tristar Gold with a short position of Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tristar Gold and Hannan Metals.

Diversification Opportunities for Tristar Gold and Hannan Metals

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tristar and Hannan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tristar Gold and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and Tristar Gold 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 Tristar Gold are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of Tristar Gold i.e., Tristar Gold and Hannan Metals go up and down completely randomly.

Pair Corralation between Tristar Gold and Hannan Metals

Assuming the 90 days horizon Tristar Gold is expected to under-perform the Hannan Metals. But the stock apears to be less risky and, when comparing its historical volatility, Tristar Gold is 1.04 times less risky than Hannan Metals. The stock trades about -0.16 of its potential returns per unit of risk. The Hannan Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Hannan Metals on August 30, 2024 and sell it today you would earn a total of  13.00  from holding Hannan Metals or generate 28.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Tristar Gold  vs.  Hannan Metals

 Performance 
       Timeline  
Tristar Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tristar Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Hannan Metals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hannan Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hannan Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tristar Gold and Hannan Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tristar Gold and Hannan Metals

The main advantage of trading using opposite Tristar Gold and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tristar Gold position performs unexpectedly, Hannan 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.
The idea behind Tristar Gold and Hannan Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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