Correlation Between Huntsman Exploration and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Huntsman Exploration and Eramet SA 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 Huntsman Exploration and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman Exploration and Eramet SA ADR, you can compare the effects of market volatilities on Huntsman Exploration and Eramet SA 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 Huntsman Exploration with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Eramet SA.
Diversification Opportunities for Huntsman Exploration and Eramet SA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huntsman and Eramet is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR and Huntsman Exploration 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 Huntsman Exploration are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Eramet SA go up and down completely randomly.
Pair Corralation between Huntsman Exploration and Eramet SA
Assuming the 90 days horizon Huntsman Exploration is expected to generate 9.58 times more return on investment than Eramet SA. However, Huntsman Exploration is 9.58 times more volatile than Eramet SA ADR. It trades about 0.27 of its potential returns per unit of risk. Eramet SA ADR is currently generating about 0.13 per unit of risk. If you would invest 2.00 in Huntsman Exploration on October 26, 2024 and sell it today you would earn a total of 2.90 from holding Huntsman Exploration or generate 145.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.74% |
Values | Daily Returns |
Huntsman Exploration vs. Eramet SA ADR
Performance |
Timeline |
Huntsman Exploration |
Eramet SA ADR |
Huntsman Exploration and Eramet SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Huntsman Exploration and Eramet SA
The main advantage of trading using opposite Huntsman Exploration and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman Exploration position performs unexpectedly, Eramet SA 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 Eramet SA will offset losses from the drop in Eramet SA's long position.Huntsman Exploration vs. Aurelia Metals Limited | Huntsman Exploration vs. Adriatic Metals PLC | Huntsman Exploration vs. American Helium | Huntsman Exploration vs. Progressive Planet Solutions |
Eramet SA vs. IGO Limited | Eramet SA vs. Nickel Mines Limited | Eramet SA vs. IGO Limited | Eramet SA vs. Edison Cobalt Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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