Correlation Between IGO and Harfang Exploration

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

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

Diversification Opportunities for IGO and Harfang Exploration

0.39

Correlation Coefficient

IGO  Harfang Exploration

Weak diversification

The 3 months correlation between IGO and Harfang is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Harfang Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harfang Exploration and IGO 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 IGO Limited are associated (or correlated) with Harfang Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harfang Exploration has no effect on the direction of IGO i.e., IGO and Harfang Exploration go up and down completely randomly.

Pair Corralation between IGO and Harfang Exploration

Assuming the 90 days horizon IGO is expected to generate 3.09 times less return on investment than Harfang Exploration. But when comparing it to its historical volatility, IGO Limited is 4.66 times less risky than Harfang Exploration. It trades about 0.1 of its potential returns per unit of risk. Harfang Exploration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Harfang Exploration on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Harfang Exploration or generate 20.0% return on investment over 90 days.

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

IGO Limited  vs.  Harfang Exploration

IGO Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, IGO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Harfang Exploration

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harfang Exploration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Harfang Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Harfang Exploration

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

The idea behind IGO Limited and Harfang Exploration 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..