Correlation Between Hawsons Iron and Stockland

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

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

Diversification Opportunities for Hawsons Iron and Stockland

0.74

Correlation Coefficient

Hawsons Iron  Stockland

Poor diversification

The 3 months correlation between Hawsons and Stockland is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland 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 Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Stockland go up and down completely randomly.

Pair Corralation between Hawsons Iron and Stockland

Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Stockland. In addition to that, Hawsons Iron is 3.33 times more volatile than Stockland. It trades about -0.05 of its total potential returns per unit of risk. Stockland is currently generating about 0.05 per unit of volatility. If you would invest  349.00  in Stockland on October 11, 2024 and sell it today you would earn a total of  139.00  from holding Stockland or generate 39.83% return on investment over 90 days.

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

Hawsons Iron  vs.  Stockland

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.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hawsons Iron and Stockland

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

The idea behind Hawsons Iron and Stockland 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.