Correlation Between O3 Mining and IperionX Limited

Can any of the company-specific risk be diversified away by investing in both O3 Mining and IperionX Limited 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 O3 Mining and IperionX Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between O3 Mining and IperionX Limited American, you can compare the effects of market volatilities on O3 Mining and IperionX Limited 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 O3 Mining with a short position of IperionX Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of O3 Mining and IperionX Limited.

Diversification Opportunities for O3 Mining and IperionX Limited

0.0

Correlation Coefficient

O3 Mining  IperionX Limited

Pay attention - limited upside

The 3 months correlation between OIIIF and IperionX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding O3 Mining and IperionX Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IperionX Limited American and O3 Mining 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 O3 Mining are associated (or correlated) with IperionX Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IperionX Limited American has no effect on the direction of O3 Mining i.e., O3 Mining and IperionX Limited go up and down completely randomly.

Pair Corralation between O3 Mining and IperionX Limited

Assuming the 90 days horizon O3 Mining is expected to under-perform the IperionX Limited. But the otc stock apears to be less risky and, when comparing its historical volatility, O3 Mining is 1.77 times less risky than IperionX Limited. The otc stock trades about -0.06 of its potential returns per unit of risk. The IperionX Limited American is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,247  in IperionX Limited American on September 4, 2024 and sell it today you would earn a total of  563.00  from holding IperionX Limited American or generate 25.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

O3 Mining  vs.  IperionX Limited American

O3 Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O3 Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, O3 Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IperionX Limited American

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with O3 Mining and IperionX Limited

The main advantage of trading using opposite O3 Mining and IperionX Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O3 Mining position performs unexpectedly, IperionX Limited 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 IperionX Limited will offset losses from the drop in IperionX Limited's long position.

The idea behind O3 Mining and IperionX Limited American 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.