Correlation Between Alaska Energy and GDI Integrated

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

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

Diversification Opportunities for Alaska Energy and GDI Integrated

0.29

Correlation Coefficient

Alaska Energy  GDI Integrated

Modest diversification

The 3 months correlation between Alaska and GDI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of Alaska Energy i.e., Alaska Energy and GDI Integrated go up and down completely randomly.

Pair Corralation between Alaska Energy and GDI Integrated

Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 2.81 times more return on investment than GDI Integrated. However, Alaska Energy is 2.81 times more volatile than GDI Integrated. It trades about 0.03 of its potential returns per unit of risk. GDI Integrated is currently generating about -0.08 per unit of risk. If you would invest  11.00  in Alaska Energy Metals on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Alaska Energy Metals or generate 0.0% return on investment over 90 days.

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

Alaska Energy Metals  vs.  GDI Integrated

Alaska Energy Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Energy Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Alaska Energy showed solid returns over the last few months and may actually be approaching a breakup point.

GDI Integrated

Risk-Adjusted Performance

Very Weak

Over the last 90 days GDI Integrated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alaska Energy and GDI Integrated

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

The idea behind Alaska Energy Metals and GDI Integrated 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.