Correlation Between Capitol Health and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Capitol Health and Peel Mining 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 Capitol Health and Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Peel Mining, you can compare the effects of market volatilities on Capitol Health and Peel Mining 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 Capitol Health with a short position of Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Peel Mining.
Diversification Opportunities for Capitol Health and Peel Mining
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capitol and Peel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining and Capitol Health 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 Capitol Health are associated (or correlated) with Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Capitol Health i.e., Capitol Health and Peel Mining go up and down completely randomly.
Pair Corralation between Capitol Health and Peel Mining
Assuming the 90 days trading horizon Capitol Health is expected to generate 0.57 times more return on investment than Peel Mining. However, Capitol Health is 1.76 times less risky than Peel Mining. It trades about 0.03 of its potential returns per unit of risk. Peel Mining is currently generating about 0.01 per unit of risk. If you would invest 30.00 in Capitol Health on September 26, 2024 and sell it today you would earn a total of 9.00 from holding Capitol Health or generate 30.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capitol Health vs. Peel Mining
Performance |
Timeline |
Capitol Health |
Peel Mining |
Capitol Health and Peel Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capitol Health and Peel Mining
The main advantage of trading using opposite Capitol Health and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.Capitol Health vs. Aneka Tambang Tbk | Capitol Health vs. BHP Group Limited | Capitol Health vs. Commonwealth Bank | Capitol Health vs. Commonwealth Bank of |
Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining vs. Aneka Tambang Tbk |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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