Correlation Between Iron Road and Hub24

Can any of the company-specific risk be diversified away by investing in both Iron Road and Hub24 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 Iron Road and Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iron Road and Hub24, you can compare the effects of market volatilities on Iron Road and Hub24 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 Iron Road with a short position of Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Hub24.

Diversification Opportunities for Iron Road and Hub24

-0.1

Correlation Coefficient

Iron Road  Hub24

Good diversification

The 3 months correlation between Iron and Hub24 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 and Iron Road 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 Iron Road are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Iron Road i.e., Iron Road and Hub24 go up and down completely randomly.

Pair Corralation between Iron Road and Hub24

Assuming the 90 days trading horizon Iron Road is expected to under-perform the Hub24. But the stock apears to be less risky and, when comparing its historical volatility, Iron Road is 2.63 times less risky than Hub24. The stock trades about -0.2 of its potential returns per unit of risk. The Hub24 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,053  in Hub24 on October 25, 2024 and sell it today you would earn a total of  467.00  from holding Hub24 or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Iron Road  vs.  Hub24

Iron Road

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hub24

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hub24 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Hub24 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Iron Road and Hub24

The main advantage of trading using opposite Iron Road and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind Iron Road and Hub24 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.