Correlation Between St Augustine and Black Iron

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

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

Diversification Opportunities for St Augustine and Black Iron

0.5

Correlation Coefficient

St Augustine  Black Iron

Very weak diversification

The 3 months correlation between SAU and Black is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding St Augustine Gold and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron and St Augustine 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 St Augustine Gold are associated (or correlated) with Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of St Augustine i.e., St Augustine and Black Iron go up and down completely randomly.

Pair Corralation between St Augustine and Black Iron

Assuming the 90 days trading horizon St Augustine is expected to generate 2.56 times less return on investment than Black Iron. But when comparing it to its historical volatility, St Augustine Gold is 1.75 times less risky than Black Iron. It trades about 0.04 of its potential returns per unit of risk. Black Iron is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Black Iron on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Black Iron or generate 75.0% return on investment over 90 days.

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

St Augustine Gold  vs.  Black Iron

St Augustine Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in St Augustine Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, St Augustine displayed solid returns over the last few months and may actually be approaching a breakup point.

Black Iron

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Black Iron are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Black Iron displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with St Augustine and Black Iron

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

The idea behind St Augustine Gold and Black Iron 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.