Correlation Between Hannan Metals and Global Battery

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

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

Diversification Opportunities for Hannan Metals and Global Battery

-0.32

Correlation Coefficient

Hannan Metals  Global Battery

Very good diversification

The 3 months correlation between Hannan and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Global Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Battery Metals and Hannan Metals 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 Hannan Metals are associated (or correlated) with Global Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Battery Metals has no effect on the direction of Hannan Metals i.e., Hannan Metals and Global Battery go up and down completely randomly.

Pair Corralation between Hannan Metals and Global Battery

Assuming the 90 days horizon Hannan Metals is expected to generate 1.94 times less return on investment than Global Battery. But when comparing it to its historical volatility, Hannan Metals is 3.91 times less risky than Global Battery. It trades about 0.17 of its potential returns per unit of risk. Global Battery Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Global Battery Metals on December 29, 2024 and sell it today you would lose (6.00) from holding Global Battery Metals or give up 37.5% of portfolio value over 90 days.

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

Hannan Metals  vs.  Global Battery Metals

Hannan Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hannan Metals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hannan Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Global Battery Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Battery Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Global Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hannan Metals and Global Battery

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

The idea behind Hannan Metals and Global Battery 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.