Correlation Between Gensource Potash and Adventus Mining

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

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

Diversification Opportunities for Gensource Potash and Adventus Mining

0.54

Correlation Coefficient

Gensource Potash  Adventus Mining

Very weak diversification

The 3 months correlation between Gensource and Adventus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gensource Potash and Adventus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adventus Mining and Gensource Potash 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 Gensource Potash are associated (or correlated) with Adventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adventus Mining has no effect on the direction of Gensource Potash i.e., Gensource Potash and Adventus Mining go up and down completely randomly.

Pair Corralation between Gensource Potash and Adventus Mining

Assuming the 90 days horizon Gensource Potash is expected to generate 10.77 times more return on investment than Adventus Mining. However, Gensource Potash is 10.77 times more volatile than Adventus Mining. It trades about 0.11 of its potential returns per unit of risk. Adventus Mining is currently generating about 0.02 per unit of risk. If you would invest  12.00  in Gensource Potash on September 4, 2024 and sell it today you would lose (6.00) from holding Gensource Potash or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.6%
Values	Daily Returns

Gensource Potash  vs.  Adventus Mining

Gensource Potash

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gensource Potash are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gensource Potash reported solid returns over the last few months and may actually be approaching a breakup point.

Adventus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gensource Potash and Adventus Mining

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

The idea behind Gensource Potash and Adventus 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.