Correlation Between Tombador Iron and Brickworks

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

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

Diversification Opportunities for Tombador Iron and Brickworks

0.0

Correlation Coefficient

Tombador Iron  Brickworks

Pay attention - limited upside

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

Pair Corralation between Tombador Iron and Brickworks

Assuming the 90 days trading horizon Tombador Iron is expected to generate 36.17 times more return on investment than Brickworks. However, Tombador Iron is 36.17 times more volatile than Brickworks. It trades about 0.04 of its potential returns per unit of risk. Brickworks is currently generating about 0.03 per unit of risk. If you would invest  2.80  in Tombador Iron on October 4, 2024 and sell it today you would earn a total of  32.20  from holding Tombador Iron or generate 1150.0% return on investment over 90 days.

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

Tombador Iron  vs.  Brickworks

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.

Brickworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Tombador Iron and Brickworks

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

The idea behind Tombador Iron and Brickworks 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .