Correlation Between Gem Diamonds and Alien Metals
Can any of the company-specific risk be diversified away by investing in both Gem Diamonds and Alien 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 Gem Diamonds and Alien Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Diamonds Limited and Alien Metals, you can compare the effects of market volatilities on Gem Diamonds and Alien 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 Gem Diamonds with a short position of Alien Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Diamonds and Alien Metals.
Diversification Opportunities for Gem Diamonds and Alien Metals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gem and Alien is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Gem Diamonds Limited and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals and Gem Diamonds 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 Gem Diamonds Limited are associated (or correlated) with Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Gem Diamonds i.e., Gem Diamonds and Alien Metals go up and down completely randomly.
Pair Corralation between Gem Diamonds and Alien Metals
Assuming the 90 days horizon Gem Diamonds Limited is expected to under-perform the Alien Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gem Diamonds Limited is 47.64 times less risky than Alien Metals. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Alien Metals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Alien Metals on September 1, 2024 and sell it today you would earn a total of 0.08 from holding Alien Metals or generate 800.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gem Diamonds Limited vs. Alien Metals
Performance |
| Timeline |
| Gem Diamonds Limited |
| Alien Metals |
Gem Diamonds and Alien Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gem Diamonds and Alien Metals
The main advantage of trading using opposite Gem Diamonds and Alien Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Diamonds position performs unexpectedly, Alien 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 Alien Metals will offset losses from the drop in Alien Metals' long position.| Gem Diamonds vs. Defiance Silver Corp | Gem Diamonds vs. HUMANA INC | Gem Diamonds vs. SCOR PK | Gem Diamonds vs. Aquagold International |
| Alien Metals vs. Cartier Iron Corp | Alien Metals vs. Arctic Star Exploration | Alien Metals vs. Denarius Silver Corp | Alien Metals vs. Pacific Ridge Exploration |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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