Correlation Between Savannah Resources and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Savannah Resources and Grid 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 Savannah Resources and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Savannah Resources Plc and Grid Metals Corp, you can compare the effects of market volatilities on Savannah Resources and Grid 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 Savannah Resources with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Savannah Resources and Grid Metals.
Diversification Opportunities for Savannah Resources and Grid Metals
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Savannah and Grid is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Savannah Resources Plc and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and Savannah 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 Savannah Resources Plc are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Savannah Resources i.e., Savannah Resources and Grid Metals go up and down completely randomly.
Pair Corralation between Savannah Resources and Grid Metals
Assuming the 90 days horizon Savannah Resources Plc is expected to generate 1.66 times more return on investment than Grid Metals. However, Savannah Resources is 1.66 times more volatile than Grid Metals Corp. It trades about 0.05 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.04 per unit of risk. If you would invest 3.50 in Savannah Resources Plc on August 29, 2024 and sell it today you would earn a total of 0.49 from holding Savannah Resources Plc or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Savannah Resources Plc vs. Grid Metals Corp
Performance |
| Timeline |
| Savannah Resources Plc |
| Grid Metals Corp |
Savannah Resources and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Savannah Resources and Grid Metals
The main advantage of trading using opposite Savannah Resources and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Savannah Resources position performs unexpectedly, Grid 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 Grid Metals will offset losses from the drop in Grid Metals' long position.| Savannah Resources vs. Lithium Energi Exploration | Savannah Resources vs. Critical Elements | Savannah Resources vs. International Battery Metals | Savannah Resources vs. Talga Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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