Correlation Between Alien Metals and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Alien Metals and Cairn Homes 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 Alien Metals and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alien Metals and Cairn Homes PLC, you can compare the effects of market volatilities on Alien Metals and Cairn Homes 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 Alien Metals with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alien Metals and Cairn Homes.
Diversification Opportunities for Alien Metals and Cairn Homes
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alien and Cairn is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Alien 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 Alien Metals are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Alien Metals i.e., Alien Metals and Cairn Homes go up and down completely randomly.
Pair Corralation between Alien Metals and Cairn Homes
Assuming the 90 days trading horizon Alien Metals is expected to under-perform the Cairn Homes. In addition to that, Alien Metals is 3.01 times more volatile than Cairn Homes PLC. It trades about -0.06 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.08 per unit of volatility. If you would invest 15,472 in Cairn Homes PLC on October 26, 2024 and sell it today you would earn a total of 2,528 from holding Cairn Homes PLC or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alien Metals vs. Cairn Homes PLC
Performance |
| Timeline |
| Alien Metals |
| Cairn Homes PLC |
Alien Metals and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alien Metals and Cairn Homes
The main advantage of trading using opposite Alien Metals and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alien Metals position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Alien Metals vs. Polar Capital Technology | Alien Metals vs. The Biotech Growth | Alien Metals vs. Allianz Technology Trust | Alien Metals vs. GlobalData PLC |
| Cairn Homes vs. Samsung Electronics Co | Cairn Homes vs. Samsung Electronics Co | Cairn Homes vs. Toyota Motor Corp | Cairn Homes vs. MOL Hungarian Oil |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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