Correlation Between Golden Minerals and Alien Metals

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

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

Diversification Opportunities for Golden Minerals and Alien Metals

0.15

Correlation Coefficient

Golden Minerals  Alien Metals

Average diversification

The 3 months correlation between Golden and Alien is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Golden Minerals and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals and Golden Minerals 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 Golden Minerals are associated (or correlated) with Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Golden Minerals i.e., Golden Minerals and Alien Metals go up and down completely randomly.

Pair Corralation between Golden Minerals and Alien Metals

Given the investment horizon of 90 days Golden Minerals is expected to under-perform the Alien Metals. But the otc stock apears to be less risky and, when comparing its historical volatility, Golden Minerals is 16.27 times less risky than Alien Metals. The otc stock trades about -0.19 of its potential returns per unit of risk. The Alien Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.59  in Alien Metals on October 14, 2024 and sell it today you would lose (0.57) from holding Alien Metals or give up 96.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Golden Minerals  vs.  Alien Metals

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals 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 primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alien Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alien Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alien Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Minerals and Alien Metals

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

The idea behind Golden Minerals and Alien 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.