Correlation Between Arbor Metals and GGL Resources

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

By analyzing existing cross correlation between Arbor Metals Corp and GGL Resources Corp, you can compare the effects of market volatilities on Arbor Metals and GGL Resources 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 Arbor Metals with a short position of GGL Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and GGL Resources.

Diversification Opportunities for Arbor Metals and GGL Resources

0.21

Correlation Coefficient

Arbor Metals  GGL Resources

Modest diversification

The 3 months correlation between Arbor and GGL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and GGL Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGL Resources Corp and Arbor Metals 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 Arbor Metals Corp are associated (or correlated) with GGL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGL Resources Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and GGL Resources go up and down completely randomly.

Pair Corralation between Arbor Metals and GGL Resources

Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the GGL Resources. But the stock apears to be less risky and, when comparing its historical volatility, Arbor Metals Corp is 1.44 times less risky than GGL Resources. The stock trades about -0.05 of its potential returns per unit of risk. The GGL Resources Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.50  in GGL Resources Corp on October 10, 2024 and sell it today you would lose (2.00) from holding GGL Resources Corp or give up 30.77% of portfolio value over 90 days.

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

Arbor Metals Corp  vs.  GGL Resources Corp

Arbor Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

GGL Resources Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GGL Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, GGL Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Metals and GGL Resources

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

The idea behind Arbor Metals Corp and GGL Resources Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.