Correlation Between Summit Resources and Greentech Metals
Can any of the company-specific risk be diversified away by investing in both Summit Resources and Greentech 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 Summit Resources and Greentech Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Resources Limited and Greentech Metals, you can compare the effects of market volatilities on Summit Resources and Greentech 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 Summit Resources with a short position of Greentech Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Resources and Greentech Metals.
Diversification Opportunities for Summit Resources and Greentech Metals
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and Greentech is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Summit Resources Limited and Greentech Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greentech Metals and Summit 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 Summit Resources Limited are associated (or correlated) with Greentech Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greentech Metals has no effect on the direction of Summit Resources i.e., Summit Resources and Greentech Metals go up and down completely randomly.
Pair Corralation between Summit Resources and Greentech Metals
Assuming the 90 days trading horizon Summit Resources Limited is expected to under-perform the Greentech Metals. In addition to that, Summit Resources is 1.43 times more volatile than Greentech Metals. It trades about -0.26 of its total potential returns per unit of risk. Greentech Metals is currently generating about -0.15 per unit of volatility. If you would invest 13.00 in Greentech Metals on August 28, 2024 and sell it today you would lose (3.30) from holding Greentech Metals or give up 25.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Resources Limited vs. Greentech Metals
Performance |
| Timeline |
| Summit Resources |
| Greentech Metals |
Summit Resources and Greentech Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Resources and Greentech Metals
The main advantage of trading using opposite Summit Resources and Greentech Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Resources position performs unexpectedly, Greentech 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 Greentech Metals will offset losses from the drop in Greentech Metals' long position.| Summit Resources vs. Northern Star Resources | Summit Resources vs. Evolution Mining | Summit Resources vs. Bluescope Steel | Summit Resources vs. Sandfire Resources NL |
| Greentech Metals vs. Northern Star Resources | Greentech Metals vs. Evolution Mining | Greentech Metals vs. Bluescope Steel | Greentech Metals vs. Sandfire Resources NL |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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