Correlation Between GCM Resources and NACCO Industries
Can any of the company-specific risk be diversified away by investing in both GCM Resources and NACCO Industries 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 GCM Resources and NACCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Resources Plc and NACCO Industries, you can compare the effects of market volatilities on GCM Resources and NACCO Industries 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 GCM Resources with a short position of NACCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Resources and NACCO Industries.
Diversification Opportunities for GCM Resources and NACCO Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GCM and NACCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GCM Resources Plc and NACCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NACCO Industries and GCM Resources 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 GCM Resources Plc are associated (or correlated) with NACCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NACCO Industries has no effect on the direction of GCM Resources i.e., GCM Resources and NACCO Industries go up and down completely randomly.
Pair Corralation between GCM Resources and NACCO Industries
Assuming the 90 days horizon GCM Resources Plc is expected to generate 7.11 times more return on investment than NACCO Industries. However, GCM Resources is 7.11 times more volatile than NACCO Industries. It trades about 0.05 of its potential returns per unit of risk. NACCO Industries is currently generating about 0.02 per unit of risk. If you would invest 7.00 in GCM Resources Plc on September 3, 2024 and sell it today you would earn a total of 5.00 from holding GCM Resources Plc or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GCM Resources Plc vs. NACCO Industries
Performance |
| Timeline |
| GCM Resources Plc |
| NACCO Industries |
GCM Resources and NACCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Resources and NACCO Industries
The main advantage of trading using opposite GCM Resources and NACCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Resources position performs unexpectedly, NACCO Industries 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 NACCO Industries will offset losses from the drop in NACCO Industries' long position.| GCM Resources vs. NACCO Industries | GCM Resources vs. Alliance Resource Partners | GCM Resources vs. Hallador Energy | GCM Resources vs. Consol Energy |
| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Consol Energy | NACCO Industries vs. Indo Tambangraya Megah |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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