Correlation Between Champion Iron and Primaris Retail

Can any of the company-specific risk be diversified away by investing in both Champion Iron and Primaris Retail 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 Champion Iron and Primaris Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Iron and Primaris Retail RE, you can compare the effects of market volatilities on Champion Iron and Primaris Retail 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 Champion Iron with a short position of Primaris Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Primaris Retail.

Diversification Opportunities for Champion Iron and Primaris Retail

0.15

Correlation Coefficient

Champion Iron  Primaris Retail

Average diversification

The 3 months correlation between Champion and Primaris is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Primaris Retail RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primaris Retail RE and Champion Iron 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 Champion Iron are associated (or correlated) with Primaris Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primaris Retail RE has no effect on the direction of Champion Iron i.e., Champion Iron and Primaris Retail go up and down completely randomly.

Pair Corralation between Champion Iron and Primaris Retail

Assuming the 90 days trading horizon Champion Iron is expected to generate 1.13 times more return on investment than Primaris Retail. However, Champion Iron is 1.13 times more volatile than Primaris Retail RE. It trades about 0.01 of its potential returns per unit of risk. Primaris Retail RE is currently generating about -0.05 per unit of risk. If you would invest  520.00  in Champion Iron on September 28, 2024 and sell it today you would earn a total of  1.00  from holding Champion Iron or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Champion Iron  vs.  Primaris Retail RE

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Primaris Retail RE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primaris Retail RE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Primaris Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champion Iron and Primaris Retail

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

The idea behind Champion Iron and Primaris Retail RE 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.