Correlation Between HMS Bergbau and Ichor Coal

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

By analyzing existing cross correlation between HMS Bergbau AG and Ichor Coal NV, you can compare the effects of market volatilities on HMS Bergbau and Ichor Coal 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 HMS Bergbau with a short position of Ichor Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMS Bergbau and Ichor Coal.

Diversification Opportunities for HMS Bergbau and Ichor Coal

-0.55

Correlation Coefficient

HMS Bergbau  Ichor Coal

Excellent diversification

The 3 months correlation between HMS and Ichor is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding HMS Bergbau AG and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV and HMS Bergbau 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 HMS Bergbau AG are associated (or correlated) with Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of HMS Bergbau i.e., HMS Bergbau and Ichor Coal go up and down completely randomly.

Pair Corralation between HMS Bergbau and Ichor Coal

Assuming the 90 days trading horizon HMS Bergbau AG is expected to generate 0.32 times more return on investment than Ichor Coal. However, HMS Bergbau AG is 3.11 times less risky than Ichor Coal. It trades about 0.13 of its potential returns per unit of risk. Ichor Coal NV is currently generating about -0.08 per unit of risk. If you would invest  1,972  in HMS Bergbau AG on October 12, 2024 and sell it today you would earn a total of  1,028  from holding HMS Bergbau AG or generate 52.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.49%
Values	Daily Returns

HMS Bergbau AG  vs.  Ichor Coal NV

HMS Bergbau AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HMS Bergbau is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ichor Coal NV

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ichor Coal NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Ichor Coal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HMS Bergbau and Ichor Coal

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

The idea behind HMS Bergbau AG and Ichor Coal NV 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 Commodity Directory module to find actively traded commodities issued by global exchanges.