Correlation Between Iodm and Hastings Rare

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

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

Diversification Opportunities for Iodm and Hastings Rare

-0.22

Correlation Coefficient

Iodm  Hastings Rare

Very good diversification

The 3 months correlation between Iodm and Hastings is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Iodm and Hastings Rare Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hastings Rare Metals and Iodm 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 Iodm are associated (or correlated) with Hastings Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hastings Rare Metals has no effect on the direction of Iodm i.e., Iodm and Hastings Rare go up and down completely randomly.

Pair Corralation between Iodm and Hastings Rare

Assuming the 90 days trading horizon Iodm is expected to generate 1.41 times more return on investment than Hastings Rare. However, Iodm is 1.41 times more volatile than Hastings Rare Metals. It trades about 0.04 of its potential returns per unit of risk. Hastings Rare Metals is currently generating about 0.02 per unit of risk. If you would invest  16.00  in Iodm on December 22, 2024 and sell it today you would earn a total of  1.00  from holding Iodm or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Iodm  vs.  Hastings Rare Metals

Iodm

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iodm are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Iodm unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hastings Rare Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hastings Rare Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hastings Rare 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 Iodm and Hastings Rare

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

The idea behind Iodm and Hastings Rare Metals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..