Correlation Between Hannan Metals and Strategic Resources

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

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

Diversification Opportunities for Hannan Metals and Strategic Resources

0.0

Correlation Coefficient

Hannan Metals  Strategic Resources

Pay attention - limited upside

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

Pair Corralation between Hannan Metals and Strategic Resources

Assuming the 90 days horizon Hannan Metals is expected to generate 5.07 times less return on investment than Strategic Resources. But when comparing it to its historical volatility, Hannan Metals is 4.58 times less risky than Strategic Resources. It trades about 0.05 of its potential returns per unit of risk. Strategic Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Strategic Resources on March 17, 2024 and sell it today you would earn a total of  22.00  from holding Strategic Resources or generate 88.0% return on investment over 90 days.

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

Hannan Metals  vs.  Strategic Resources

Hannan Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hannan Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hannan Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Strategic Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hannan Metals and Strategic Resources

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

The idea behind Hannan Metals and Strategic Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.