Correlation Between Ichor Coal and HMS Bergbau

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

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

Diversification Opportunities for Ichor Coal and HMS Bergbau

-0.59

Correlation Coefficient

Ichor Coal  HMS Bergbau

Excellent diversification

The 3 months correlation between Ichor and HMS is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Coal NV and HMS Bergbau AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Bergbau AG and Ichor Coal 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 Ichor Coal NV are associated (or correlated) with HMS Bergbau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Bergbau AG has no effect on the direction of Ichor Coal i.e., Ichor Coal and HMS Bergbau go up and down completely randomly.

Pair Corralation between Ichor Coal and HMS Bergbau

Assuming the 90 days trading horizon Ichor Coal NV is expected to under-perform the HMS Bergbau. In addition to that, Ichor Coal is 2.32 times more volatile than HMS Bergbau AG. It trades about -0.1 of its total potential returns per unit of risk. HMS Bergbau AG is currently generating about 0.14 per unit of volatility. If you would invest  2,353  in HMS Bergbau AG on September 24, 2024 and sell it today you would earn a total of  567.00  from holding HMS Bergbau AG or generate 24.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.06%
Values	Daily Returns

Ichor Coal NV  vs.  HMS Bergbau AG

Ichor Coal NV

Risk-Adjusted Performance

0 of 100

Very 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 fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

HMS Bergbau AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, HMS Bergbau may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ichor Coal and HMS Bergbau

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

The idea behind Ichor Coal NV and HMS Bergbau AG 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 Stocks Directory module to find actively traded stocks across global markets.