Correlation Between Horseshoe Metals and Australian Strategic

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

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

Diversification Opportunities for Horseshoe Metals and Australian Strategic

-0.63

Correlation Coefficient

Horseshoe Metals  Australian Strategic

Excellent diversification

The 3 months correlation between Horseshoe and Australian is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Horseshoe Metals and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Horseshoe Metals 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 Horseshoe Metals are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Horseshoe Metals i.e., Horseshoe Metals and Australian Strategic go up and down completely randomly.

Pair Corralation between Horseshoe Metals and Australian Strategic

Assuming the 90 days trading horizon Horseshoe Metals is expected to generate 2.42 times more return on investment than Australian Strategic. However, Horseshoe Metals is 2.42 times more volatile than Australian Strategic Materials. It trades about 0.16 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.04 per unit of risk. If you would invest  0.70  in Horseshoe Metals on September 29, 2024 and sell it today you would earn a total of  0.70  from holding Horseshoe Metals or generate 100.0% return on investment over 90 days.

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

Horseshoe Metals  vs.  Australian Strategic Materials

Horseshoe Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horseshoe Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Horseshoe Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary 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 Horseshoe Metals and Australian Strategic

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

The idea behind Horseshoe Metals and Australian Strategic Materials 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.