Correlation Between Hawsons Iron and Boss Energy

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

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

Diversification Opportunities for Hawsons Iron and Boss Energy

0.9

Correlation Coefficient

Hawsons Iron  Boss Energy

Almost no diversification

The 3 months correlation between Hawsons and Boss is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Hawsons 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 Hawsons Iron are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Boss Energy go up and down completely randomly.

Pair Corralation between Hawsons Iron and Boss Energy

Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Boss Energy. In addition to that, Hawsons Iron is 1.54 times more volatile than Boss Energy Limited. It trades about -0.04 of its total potential returns per unit of risk. Boss Energy Limited is currently generating about 0.17 per unit of volatility. If you would invest  255.00  in Boss Energy Limited on October 10, 2024 and sell it today you would earn a total of  24.00  from holding Boss Energy Limited or generate 9.41% return on investment over 90 days.

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

Hawsons Iron  vs.  Boss Energy Limited

Hawsons Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawsons Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Boss Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boss Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hawsons Iron and Boss Energy

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

The idea behind Hawsons Iron and Boss Energy Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.