Correlation Between Supremex and Champion Iron

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

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

Diversification Opportunities for Supremex and Champion Iron

0.39

Correlation Coefficient

Supremex  Champion Iron

Weak diversification

The 3 months correlation between Supremex and Champion is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Supremex 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 Supremex 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 Supremex i.e., Supremex and Champion Iron go up and down completely randomly.

Pair Corralation between Supremex and Champion Iron

Assuming the 90 days trading horizon Supremex is expected to generate 2.78 times less return on investment than Champion Iron. In addition to that, Supremex is 1.06 times more volatile than Champion Iron. It trades about 0.05 of its total potential returns per unit of risk. Champion Iron is currently generating about 0.15 per unit of volatility. If you would invest  376.00  in Champion Iron on April 24, 2025 and sell it today you would earn a total of  87.00  from holding Champion Iron or generate 23.14% return on investment over 90 days.

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

Supremex  vs.  Champion Iron

Supremex

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Supremex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Supremex may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Champion Iron

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Iron are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Champion Iron displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Supremex and Champion Iron

The main advantage of trading using opposite Supremex and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex 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 Supremex 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 Transaction History module to view history of all your transactions and understand their impact on performance.