Correlation Between Cofina SGPS and De Grey

Can any of the company-specific risk be diversified away by investing in both Cofina SGPS and De Grey 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 Cofina SGPS and De Grey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cofina SGPS SA and De Grey Mining, you can compare the effects of market volatilities on Cofina SGPS and De Grey 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 Cofina SGPS with a short position of De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cofina SGPS and De Grey.

Diversification Opportunities for Cofina SGPS and De Grey

0.41

Correlation Coefficient

Cofina SGPS  De Grey

Very weak diversification

The 3 months correlation between Cofina and DGD is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cofina SGPS SA and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and Cofina SGPS 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 Cofina SGPS SA are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Cofina SGPS i.e., Cofina SGPS and De Grey go up and down completely randomly.

Pair Corralation between Cofina SGPS and De Grey

Assuming the 90 days horizon Cofina SGPS SA is expected to generate 10.68 times more return on investment than De Grey. However, Cofina SGPS is 10.68 times more volatile than De Grey Mining. It trades about 0.07 of its potential returns per unit of risk. De Grey Mining is currently generating about -0.19 per unit of risk. If you would invest  3,300  in Cofina SGPS SA on October 8, 2024 and sell it today you would lose (460.00) from holding Cofina SGPS SA or give up 13.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cofina SGPS SA  vs.  De Grey Mining

Cofina SGPS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cofina SGPS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cofina SGPS reported solid returns over the last few months and may actually be approaching a breakup point.

De Grey Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cofina SGPS and De Grey

The main advantage of trading using opposite Cofina SGPS and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cofina SGPS position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.

The idea behind Cofina SGPS SA and De Grey Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.