Correlation Between Big Rock and Hinterland Metals

Can any of the company-specific risk be diversified away by investing in both Big Rock and Hinterland 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 Big Rock and Hinterland Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big Rock Brewery and Hinterland Metals, you can compare the effects of market volatilities on Big Rock and Hinterland 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 Big Rock with a short position of Hinterland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Hinterland Metals.

Diversification Opportunities for Big Rock and Hinterland Metals

0.0

Correlation Coefficient

Big Rock  Hinterland Metals

Pay attention - limited upside

The 3 months correlation between Big and Hinterland is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Hinterland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinterland Metals and Big Rock 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 Big Rock Brewery are associated (or correlated) with Hinterland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinterland Metals has no effect on the direction of Big Rock i.e., Big Rock and Hinterland Metals go up and down completely randomly.

Pair Corralation between Big Rock and Hinterland Metals

If you would invest  6.33  in Big Rock Brewery on October 11, 2024 and sell it today you would earn a total of  99.67  from holding Big Rock Brewery or generate 1574.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Big Rock Brewery  vs.  Hinterland Metals

Big Rock Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Hinterland Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hinterland Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Hinterland Metals is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Big Rock and Hinterland Metals

The main advantage of trading using opposite Big Rock and Hinterland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Hinterland 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 Hinterland Metals will offset losses from the drop in Hinterland Metals' long position.

The idea behind Big Rock Brewery and Hinterland 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.