Correlation Between IperionX Limited and Skeena Resources

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

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

Diversification Opportunities for IperionX Limited and Skeena Resources

0.26

Correlation Coefficient

IperionX Limited  Skeena Resources

Modest diversification

The 3 months correlation between IperionX and Skeena is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding IperionX Limited American and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources and IperionX Limited 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 IperionX Limited American are associated (or correlated) with Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of IperionX Limited i.e., IperionX Limited and Skeena Resources go up and down completely randomly.

Pair Corralation between IperionX Limited and Skeena Resources

Considering the 90-day investment horizon IperionX Limited American is expected to generate 1.06 times more return on investment than Skeena Resources. However, IperionX Limited is 1.06 times more volatile than Skeena Resources. It trades about 0.23 of its potential returns per unit of risk. Skeena Resources is currently generating about 0.12 per unit of risk. If you would invest  1,802  in IperionX Limited American on September 4, 2024 and sell it today you would earn a total of  1,039  from holding IperionX Limited American or generate 57.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

IperionX Limited American  vs.  Skeena Resources

IperionX Limited American

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Skeena Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skeena Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Skeena Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IperionX Limited and Skeena Resources

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

The idea behind IperionX Limited American and Skeena Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.