Correlation Between IGO and Hannan Metals

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

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

Diversification Opportunities for IGO and Hannan Metals

-0.51

Correlation Coefficient

IGO  Hannan Metals

Excellent diversification

The 3 months correlation between IGO and Hannan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and IGO 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 IGO Limited are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of IGO i.e., IGO and Hannan Metals go up and down completely randomly.

Pair Corralation between IGO and Hannan Metals

Assuming the 90 days horizon IGO Limited is expected to generate 0.78 times more return on investment than Hannan Metals. However, IGO Limited is 1.28 times less risky than Hannan Metals. It trades about 0.11 of its potential returns per unit of risk. Hannan Metals is currently generating about -0.08 per unit of risk. If you would invest  231.00  in IGO Limited on May 7, 2025 and sell it today you would earn a total of  69.00  from holding IGO Limited or generate 29.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

IGO Limited  vs.  Hannan Metals

IGO Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, IGO reported solid returns over the last few months and may actually be approaching a breakup point.

Hannan Metals

Risk-Adjusted Performance

Weakest

Over the last 90 days Hannan Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IGO and Hannan Metals

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

The idea behind IGO Limited and Hannan Metals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.