Correlation Between GEAR4MUSIC (HLDGS) and CHAMPION IRON

Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC (HLDGS) and CHAMPION IRON 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 GEAR4MUSIC (HLDGS) and CHAMPION IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEAR4MUSIC LS 10 and CHAMPION IRON, you can compare the effects of market volatilities on GEAR4MUSIC (HLDGS) and CHAMPION IRON 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 GEAR4MUSIC (HLDGS) with a short position of CHAMPION IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC (HLDGS) and CHAMPION IRON.

Diversification Opportunities for GEAR4MUSIC (HLDGS) and CHAMPION IRON

-0.03

Correlation Coefficient

GEAR4MUSIC (HLDGS)  CHAMPION IRON

Good diversification

The 3 months correlation between GEAR4MUSIC and CHAMPION is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and CHAMPION IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION IRON and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10 are associated (or correlated) with CHAMPION IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION IRON has no effect on the direction of GEAR4MUSIC (HLDGS) i.e., GEAR4MUSIC (HLDGS) and CHAMPION IRON go up and down completely randomly.

Pair Corralation between GEAR4MUSIC (HLDGS) and CHAMPION IRON

Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to generate 1.48 times more return on investment than CHAMPION IRON. However, GEAR4MUSIC (HLDGS) is 1.48 times more volatile than CHAMPION IRON. It trades about 0.23 of its potential returns per unit of risk. CHAMPION IRON is currently generating about 0.11 per unit of risk. If you would invest  148.00  in GEAR4MUSIC LS 10 on April 25, 2025 and sell it today you would earn a total of  102.00  from holding GEAR4MUSIC LS 10 or generate 68.92% return on investment over 90 days.

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

GEAR4MUSIC LS 10  vs.  CHAMPION IRON

GEAR4MUSIC (HLDGS)

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEAR4MUSIC LS 10 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GEAR4MUSIC (HLDGS) reported solid returns over the last few months and may actually be approaching a breakup point.

CHAMPION IRON

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION IRON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CHAMPION IRON reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEAR4MUSIC (HLDGS) and CHAMPION IRON

The main advantage of trading using opposite GEAR4MUSIC (HLDGS) and CHAMPION IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC (HLDGS) position performs unexpectedly, CHAMPION IRON 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 CHAMPION IRON will offset losses from the drop in CHAMPION IRON's long position.

The idea behind GEAR4MUSIC LS 10 and CHAMPION IRON 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.