Correlation Between GAMING FAC and SIERRA METALS

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

By analyzing existing cross correlation between GAMING FAC SA and SIERRA METALS, you can compare the effects of market volatilities on GAMING FAC and SIERRA 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 GAMING FAC with a short position of SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and SIERRA METALS.

Diversification Opportunities for GAMING FAC and SIERRA METALS

-0.01

Correlation Coefficient

GAMING FAC  SIERRA METALS

Good diversification

The 3 months correlation between GAMING and SIERRA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA METALS and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of GAMING FAC i.e., GAMING FAC and SIERRA METALS go up and down completely randomly.

Pair Corralation between GAMING FAC and SIERRA METALS

Assuming the 90 days horizon GAMING FAC SA is expected to under-perform the SIERRA METALS. But the stock apears to be less risky and, when comparing its historical volatility, GAMING FAC SA is 1.35 times less risky than SIERRA METALS. The stock trades about -0.06 of its potential returns per unit of risk. The SIERRA METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  45.00  in SIERRA METALS on October 9, 2024 and sell it today you would earn a total of  8.00  from holding SIERRA METALS or generate 17.78% return on investment over 90 days.

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

GAMING FAC SA  vs.  SIERRA METALS

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SIERRA METALS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIERRA METALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SIERRA METALS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GAMING FAC and SIERRA METALS

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

The idea behind GAMING FAC SA and SIERRA METALS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .