Correlation Between Gemfields Group and Pacific Ridge
Can any of the company-specific risk be diversified away by investing in both Gemfields Group and Pacific Ridge 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 Gemfields Group and Pacific Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemfields Group Limited and Pacific Ridge Exploration, you can compare the effects of market volatilities on Gemfields Group and Pacific Ridge 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 Gemfields Group with a short position of Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemfields Group and Pacific Ridge.
Diversification Opportunities for Gemfields Group and Pacific Ridge
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gemfields and Pacific is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gemfields Group Limited and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge Exploration and Gemfields Group 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 Gemfields Group Limited are associated (or correlated) with Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of Gemfields Group i.e., Gemfields Group and Pacific Ridge go up and down completely randomly.
Pair Corralation between Gemfields Group and Pacific Ridge
Assuming the 90 days horizon Gemfields Group Limited is expected to under-perform the Pacific Ridge. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gemfields Group Limited is 25.35 times less risky than Pacific Ridge. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Pacific Ridge Exploration is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Pacific Ridge Exploration on November 2, 2024 and sell it today you would lose (20.00) from holding Pacific Ridge Exploration or give up 60.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.52% |
| Values | Daily Returns |
Gemfields Group Limited vs. Pacific Ridge Exploration
Performance |
| Timeline |
| Gemfields Group |
| Pacific Ridge Exploration |
Gemfields Group and Pacific Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gemfields Group and Pacific Ridge
The main advantage of trading using opposite Gemfields Group and Pacific Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemfields Group position performs unexpectedly, Pacific Ridge 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 Pacific Ridge will offset losses from the drop in Pacific Ridge's long position.| Gemfields Group vs. Star Royalties | Gemfields Group vs. Defiance Silver Corp | Gemfields Group vs. Diamond Fields Resources | Gemfields Group vs. GoGold Resources |
| Pacific Ridge vs. Alien Metals | Pacific Ridge vs. Cartier Iron Corp | Pacific Ridge vs. Arctic Star Exploration | Pacific Ridge vs. Denarius Silver Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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