Correlation Between Iluka Resources and Cromwell Property

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

By analyzing existing cross correlation between Iluka Resources and Cromwell Property Group, you can compare the effects of market volatilities on Iluka Resources and Cromwell Property 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 Iluka Resources with a short position of Cromwell Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Cromwell Property.

Diversification Opportunities for Iluka Resources and Cromwell Property

0.8

Correlation Coefficient

Iluka Resources  Cromwell Property

Very poor diversification

The 3 months correlation between Iluka and Cromwell is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property and Iluka Resources 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 Iluka Resources are associated (or correlated) with Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of Iluka Resources i.e., Iluka Resources and Cromwell Property go up and down completely randomly.

Pair Corralation between Iluka Resources and Cromwell Property

Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Cromwell Property. In addition to that, Iluka Resources is 1.03 times more volatile than Cromwell Property Group. It trades about -0.04 of its total potential returns per unit of risk. Cromwell Property Group is currently generating about -0.03 per unit of volatility. If you would invest  40.00  in Cromwell Property Group on August 31, 2024 and sell it today you would lose (2.00) from holding Cromwell Property Group or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Iluka Resources  vs.  Cromwell Property Group

Iluka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iluka Resources 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.

Cromwell Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cromwell Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cromwell Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Iluka Resources and Cromwell Property

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

The idea behind Iluka Resources and Cromwell Property Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.