Correlation Between Hansa Investment and Central Asia
Can any of the company-specific risk be diversified away by investing in both Hansa Investment and Central Asia 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 Hansa Investment and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Investment and Central Asia Metals, you can compare the effects of market volatilities on Hansa Investment and Central Asia 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 Hansa Investment with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Investment and Central Asia.
Diversification Opportunities for Hansa Investment and Central Asia
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hansa and Central is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and Hansa Investment 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 Hansa Investment are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Hansa Investment i.e., Hansa Investment and Central Asia go up and down completely randomly.
Pair Corralation between Hansa Investment and Central Asia
Assuming the 90 days trading horizon Hansa Investment is expected to under-perform the Central Asia. But the stock apears to be less risky and, when comparing its historical volatility, Hansa Investment is 1.27 times less risky than Central Asia. The stock trades about -0.05 of its potential returns per unit of risk. The Central Asia Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,300 in Central Asia Metals on December 30, 2024 and sell it today you would earn a total of 1,480 from holding Central Asia Metals or generate 9.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hansa Investment vs. Central Asia Metals
Performance |
Timeline |
Hansa Investment |
Central Asia Metals |
Hansa Investment and Central Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hansa Investment and Central Asia
The main advantage of trading using opposite Hansa Investment and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.Hansa Investment vs. Power Metal Resources | Hansa Investment vs. Beowulf Mining | Hansa Investment vs. Silvercorp Metals | Hansa Investment vs. Coeur Mining |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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