Correlation Between 878742AS4 and Black Hills

Can any of the company-specific risk be diversified away by investing in both 878742AS4 and Black Hills 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 878742AS4 and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teck Resources 6 and Black Hills, you can compare the effects of market volatilities on 878742AS4 and Black Hills 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 878742AS4 with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of 878742AS4 and Black Hills.

Diversification Opportunities for 878742AS4 and Black Hills

-0.38

Correlation Coefficient

878742AS4  Black Hills

Very good diversification

The 3 months correlation between 878742AS4 and Black is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources 6 and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and 878742AS4 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 Teck Resources 6 are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of 878742AS4 i.e., 878742AS4 and Black Hills go up and down completely randomly.

Pair Corralation between 878742AS4 and Black Hills

Assuming the 90 days trading horizon 878742AS4 is expected to generate 1.29 times less return on investment than Black Hills. In addition to that, 878742AS4 is 1.25 times more volatile than Black Hills. It trades about 0.04 of its total potential returns per unit of risk. Black Hills is currently generating about 0.07 per unit of volatility. If you would invest  5,877  in Black Hills on September 12, 2024 and sell it today you would earn a total of  261.00  from holding Black Hills or generate 4.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.5%
Values	Daily Returns

Teck Resources 6  vs.  Black Hills

Teck Resources 6

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teck Resources 6 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 878742AS4 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Black Hills

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with 878742AS4 and Black Hills

The main advantage of trading using opposite 878742AS4 and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 878742AS4 position performs unexpectedly, Black Hills 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 Hills will offset losses from the drop in Black Hills' long position.

The idea behind Teck Resources 6 and Black Hills 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.