Correlation Between Gensource Potash and China Rare
Can any of the company-specific risk be diversified away by investing in both Gensource Potash and China Rare 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 Gensource Potash and China Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gensource Potash and China Rare Earth, you can compare the effects of market volatilities on Gensource Potash and China Rare 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 Gensource Potash with a short position of China Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gensource Potash and China Rare.
Diversification Opportunities for Gensource Potash and China Rare
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gensource and China is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gensource Potash and China Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Rare Earth and Gensource Potash 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 Gensource Potash are associated (or correlated) with China Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Rare Earth has no effect on the direction of Gensource Potash i.e., Gensource Potash and China Rare go up and down completely randomly.
Pair Corralation between Gensource Potash and China Rare
Assuming the 90 days horizon Gensource Potash is expected to generate 2.18 times more return on investment than China Rare. However, Gensource Potash is 2.18 times more volatile than China Rare Earth. It trades about 0.1 of its potential returns per unit of risk. China Rare Earth is currently generating about 0.08 per unit of risk. If you would invest 5.00 in Gensource Potash on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Gensource Potash or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gensource Potash vs. China Rare Earth
Performance |
| Timeline |
| Gensource Potash |
| China Rare Earth |
Gensource Potash and China Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gensource Potash and China Rare
The main advantage of trading using opposite Gensource Potash and China Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gensource Potash position performs unexpectedly, China Rare 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 China Rare will offset losses from the drop in China Rare's long position.| Gensource Potash vs. South32 Limited | Gensource Potash vs. NioCorp Developments Ltd | Gensource Potash vs. HUMANA INC | Gensource Potash vs. SCOR PK |
| China Rare vs. Edison Cobalt Corp | China Rare vs. Baroyeca Gold Silver | China Rare vs. Aurelia Metals Limited | China Rare vs. Champion Bear Resources |
Check out your portfolio center.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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