Correlation Between Endeavour Mining and Gelsenwasser

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

By analyzing existing cross correlation between Endeavour Mining PLC and Gelsenwasser AG, you can compare the effects of market volatilities on Endeavour Mining and Gelsenwasser 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 Endeavour Mining with a short position of Gelsenwasser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Mining and Gelsenwasser.

Diversification Opportunities for Endeavour Mining and Gelsenwasser

0.08

Correlation Coefficient

Endeavour Mining  Gelsenwasser

Significant diversification

The 3 months correlation between Endeavour and Gelsenwasser is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and Gelsenwasser AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelsenwasser AG and Endeavour Mining 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 Endeavour Mining PLC are associated (or correlated) with Gelsenwasser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelsenwasser AG has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Gelsenwasser go up and down completely randomly.

Pair Corralation between Endeavour Mining and Gelsenwasser

Assuming the 90 days trading horizon Endeavour Mining PLC is expected to generate 1.09 times more return on investment than Gelsenwasser. However, Endeavour Mining is 1.09 times more volatile than Gelsenwasser AG. It trades about 0.03 of its potential returns per unit of risk. Gelsenwasser AG is currently generating about -0.05 per unit of risk. If you would invest  1,627  in Endeavour Mining PLC on October 9, 2024 and sell it today you would earn a total of  186.00  from holding Endeavour Mining PLC or generate 11.43% return on investment over 90 days.

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

Endeavour Mining PLC  vs.  Gelsenwasser AG

Endeavour Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gelsenwasser AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gelsenwasser AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gelsenwasser is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Endeavour Mining and Gelsenwasser

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

The idea behind Endeavour Mining PLC and Gelsenwasser AG 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.