Correlation Between Critical Metals and GMO Internet

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

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

Diversification Opportunities for Critical Metals and GMO Internet

-0.76

Correlation Coefficient

Critical Metals  GMO Internet

Pay attention - limited upside

The 3 months correlation between Critical and GMO is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Critical Metals Corp and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet and Critical 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 Critical Metals Corp are associated (or correlated) with GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Critical Metals i.e., Critical Metals and GMO Internet go up and down completely randomly.

Pair Corralation between Critical Metals and GMO Internet

Given the investment horizon of 90 days Critical Metals Corp is expected to under-perform the GMO Internet. In addition to that, Critical Metals is 5.33 times more volatile than GMO Internet. It trades about -0.14 of its total potential returns per unit of risk. GMO Internet is currently generating about 0.2 per unit of volatility. If you would invest  1,741  in GMO Internet on December 20, 2024 and sell it today you would earn a total of  444.00  from holding GMO Internet or generate 25.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Critical Metals Corp  vs.  GMO Internet

Critical Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Critical Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GMO Internet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, GMO Internet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Metals and GMO Internet

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

The idea behind Critical Metals Corp and GMO Internet 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.