Correlation Between WiseTech Global and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Hammer 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 WiseTech Global and Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Hammer Metals, you can compare the effects of market volatilities on WiseTech Global and Hammer 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 WiseTech Global with a short position of Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Hammer Metals.
Diversification Opportunities for WiseTech Global and Hammer Metals
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between WiseTech and Hammer is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of WiseTech Global i.e., WiseTech Global and Hammer Metals go up and down completely randomly.
Pair Corralation between WiseTech Global and Hammer Metals
Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 0.35 times more return on investment than Hammer Metals. However, WiseTech Global Limited is 2.86 times less risky than Hammer Metals. It trades about 0.01 of its potential returns per unit of risk. Hammer Metals is currently generating about -0.12 per unit of risk. If you would invest 12,389 in WiseTech Global Limited on November 2, 2024 and sell it today you would earn a total of 5.00 from holding WiseTech Global Limited or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Hammer Metals
Performance |
| Timeline |
| WiseTech Global |
| Hammer Metals |
WiseTech Global and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Hammer Metals
The main advantage of trading using opposite WiseTech Global and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Hammer 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| WiseTech Global vs. Aeon Metals | WiseTech Global vs. Beston Global Food | WiseTech Global vs. Dalaroo Metals | WiseTech Global vs. Computershare |
| Hammer Metals vs. Spirit Telecom | Hammer Metals vs. Argo Investments | Hammer Metals vs. Queste Communications | Hammer Metals vs. Alternative Investment Trust |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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