Correlation Between Champion Iron and FOS Capital

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

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

Diversification Opportunities for Champion Iron and FOS Capital

0.2

Correlation Coefficient

Champion Iron  FOS Capital

Modest diversification

The 3 months correlation between Champion and FOS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and FOS Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOS Capital and Champion 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 Champion Iron are associated (or correlated) with FOS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOS Capital has no effect on the direction of Champion Iron i.e., Champion Iron and FOS Capital go up and down completely randomly.

Pair Corralation between Champion Iron and FOS Capital

Assuming the 90 days trading horizon Champion Iron is expected to generate 0.7 times more return on investment than FOS Capital. However, Champion Iron is 1.43 times less risky than FOS Capital. It trades about 0.12 of its potential returns per unit of risk. FOS Capital is currently generating about 0.03 per unit of risk. If you would invest  398.00  in Champion Iron on April 20, 2025 and sell it today you would earn a total of  72.00  from holding Champion Iron or generate 18.09% return on investment over 90 days.

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

Champion Iron  vs.  FOS Capital

Champion Iron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Iron are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Champion Iron unveiled solid returns over the last few months and may actually be approaching a breakup point.

FOS Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FOS Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FOS Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Champion Iron and FOS Capital

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

The idea behind Champion Iron and FOS Capital 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.