Correlation Between Tombador Iron and Aeris Environmental

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

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

Diversification Opportunities for Tombador Iron and Aeris Environmental

0.0

Correlation Coefficient

Tombador Iron  Aeris Environmental

Pay attention - limited upside

The 3 months correlation between Tombador and Aeris is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tombador Iron and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental and Tombador Iron 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 Tombador Iron are associated (or correlated) with Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of Tombador Iron i.e., Tombador Iron and Aeris Environmental go up and down completely randomly.

Pair Corralation between Tombador Iron and Aeris Environmental

Assuming the 90 days trading horizon Tombador Iron is expected to generate 10.41 times more return on investment than Aeris Environmental. However, Tombador Iron is 10.41 times more volatile than Aeris Environmental. It trades about 0.04 of its potential returns per unit of risk. Aeris Environmental is currently generating about 0.06 per unit of risk. If you would invest  2.60  in Tombador Iron on September 4, 2024 and sell it today you would earn a total of  32.40  from holding Tombador Iron or generate 1246.15% return on investment over 90 days.

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

Tombador Iron  vs.  Aeris Environmental

Tombador Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tombador Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tombador Iron is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aeris Environmental

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aeris Environmental are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Aeris Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tombador Iron and Aeris Environmental

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

The idea behind Tombador Iron and Aeris Environmental 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.