Correlation Between Legacy Iron and Finexia Financial

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

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

Diversification Opportunities for Legacy Iron and Finexia Financial

-0.32

Correlation Coefficient

Legacy Iron  Finexia Financial

Very good diversification

The 3 months correlation between Legacy and Finexia is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial and Legacy 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 Legacy Iron Ore are associated (or correlated) with Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Legacy Iron i.e., Legacy Iron and Finexia Financial go up and down completely randomly.

Pair Corralation between Legacy Iron and Finexia Financial

Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Finexia Financial. In addition to that, Legacy Iron is 1.3 times more volatile than Finexia Financial Group. It trades about -0.12 of its total potential returns per unit of risk. Finexia Financial Group is currently generating about -0.02 per unit of volatility. If you would invest  30.00  in Finexia Financial Group on September 30, 2024 and sell it today you would lose (2.00) from holding Finexia Financial Group or give up 6.67% of portfolio value over 90 days.

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

Legacy Iron Ore  vs.  Finexia Financial Group

Legacy Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legacy Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Finexia Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Legacy Iron and Finexia Financial

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

The idea behind Legacy Iron Ore and Finexia Financial Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.