Correlation Between Alliance Resource and GCM Resources

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

By analyzing existing cross correlation between Alliance Resource Partners and GCM Resources Plc, you can compare the effects of market volatilities on Alliance Resource and GCM 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 Alliance Resource with a short position of GCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Resource and GCM Resources.

Diversification Opportunities for Alliance Resource and GCM Resources

0.0

Correlation Coefficient

Alliance Resource  GCM Resources

Pay attention - limited upside

The 3 months correlation between Alliance and GCM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and GCM Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Resources Plc and Alliance Resource 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 Alliance Resource Partners are associated (or correlated) with GCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Resources Plc has no effect on the direction of Alliance Resource i.e., Alliance Resource and GCM Resources go up and down completely randomly.

Pair Corralation between Alliance Resource and GCM Resources

If you would invest  2,266  in Alliance Resource Partners on September 12, 2024 and sell it today you would earn a total of  337.00  from holding Alliance Resource Partners or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alliance Resource Partners  vs.  GCM Resources Plc

Alliance Resource

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Resource Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Alliance Resource reported solid returns over the last few months and may actually be approaching a breakup point.

GCM Resources Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alliance Resource and GCM Resources

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

The idea behind Alliance Resource Partners and GCM Resources Plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.