Correlation Between WA1 Resources and Hansen Technologies
Can any of the company-specific risk be diversified away by investing in both WA1 Resources and Hansen Technologies 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 WA1 Resources and Hansen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WA1 Resources and Hansen Technologies, you can compare the effects of market volatilities on WA1 Resources and Hansen Technologies 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 WA1 Resources with a short position of Hansen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA1 Resources and Hansen Technologies.
Diversification Opportunities for WA1 Resources and Hansen Technologies
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WA1 and Hansen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding WA1 Resources and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and WA1 Resources 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 WA1 Resources are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of WA1 Resources i.e., WA1 Resources and Hansen Technologies go up and down completely randomly.
Pair Corralation between WA1 Resources and Hansen Technologies
Assuming the 90 days trading horizon WA1 Resources is expected to generate 2.1 times more return on investment than Hansen Technologies. However, WA1 Resources is 2.1 times more volatile than Hansen Technologies. It trades about 0.24 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.01 per unit of risk. If you would invest 1,317 in WA1 Resources on September 13, 2024 and sell it today you would earn a total of 293.00 from holding WA1 Resources or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WA1 Resources vs. Hansen Technologies
Performance |
| Timeline |
| WA1 Resources |
| Hansen Technologies |
WA1 Resources and Hansen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WA1 Resources and Hansen Technologies
The main advantage of trading using opposite WA1 Resources and Hansen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA1 Resources position performs unexpectedly, Hansen Technologies 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 Hansen Technologies will offset losses from the drop in Hansen Technologies' long position.| WA1 Resources vs. Aeris Environmental | WA1 Resources vs. Bisalloy Steel Group | WA1 Resources vs. Falcon Metals | WA1 Resources vs. Tombador Iron |
| Hansen Technologies vs. Pioneer Credit | Hansen Technologies vs. BSP Financial Group | Hansen Technologies vs. Insignia Financial | Hansen Technologies vs. Retail Food Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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