Correlation Between GALENA MINING and CGN Power
Can any of the company-specific risk be diversified away by investing in both GALENA MINING and CGN Power 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 GALENA MINING and CGN Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GALENA MINING LTD and CGN Power Co, you can compare the effects of market volatilities on GALENA MINING and CGN Power 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 GALENA MINING with a short position of CGN Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GALENA MINING and CGN Power.
Diversification Opportunities for GALENA MINING and CGN Power
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between GALENA and CGN is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding GALENA MINING LTD and CGN Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGN Power and GALENA MINING 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 GALENA MINING LTD are associated (or correlated) with CGN Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGN Power has no effect on the direction of GALENA MINING i.e., GALENA MINING and CGN Power go up and down completely randomly.
Pair Corralation between GALENA MINING and CGN Power
Assuming the 90 days horizon GALENA MINING LTD is expected to under-perform the CGN Power. But the stock apears to be less risky and, when comparing its historical volatility, GALENA MINING LTD is 1.78 times less risky than CGN Power. The stock trades about -0.02 of its potential returns per unit of risk. The CGN Power Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.91 in CGN Power Co on October 28, 2024 and sell it today you would earn a total of 21.09 from holding CGN Power Co or generate 305.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GALENA MINING LTD vs. CGN Power Co
Performance |
| Timeline |
| GALENA MINING LTD |
| CGN Power |
GALENA MINING and CGN Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GALENA MINING and CGN Power
The main advantage of trading using opposite GALENA MINING and CGN Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GALENA MINING position performs unexpectedly, CGN Power 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 CGN Power will offset losses from the drop in CGN Power's long position.| GALENA MINING vs. Rio Tinto Group | GALENA MINING vs. Anglo American plc | GALENA MINING vs. Mineral Resources Limited | GALENA MINING vs. NEXA RESOURCES SA |
| CGN Power vs. Soken Chemical Engineering | CGN Power vs. China BlueChemical | CGN Power vs. PLAY2CHILL SA ZY | CGN Power vs. PLAYMATES TOYS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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