Correlation Between De Grey and Techgen Metals

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

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

Diversification Opportunities for De Grey and Techgen Metals

0.41

Correlation Coefficient

De Grey  Techgen Metals

Very weak diversification

The 3 months correlation between DEG and Techgen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Techgen Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techgen Metals and De Grey 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 De Grey Mining are associated (or correlated) with Techgen Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techgen Metals has no effect on the direction of De Grey i.e., De Grey and Techgen Metals go up and down completely randomly.

Pair Corralation between De Grey and Techgen Metals

Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.37 times more return on investment than Techgen Metals. However, De Grey Mining is 2.72 times less risky than Techgen Metals. It trades about -0.15 of its potential returns per unit of risk. Techgen Metals is currently generating about -0.12 per unit of risk. If you would invest  192.00  in De Grey Mining on October 10, 2024 and sell it today you would lose (10.00) from holding De Grey Mining or give up 5.21% of portfolio value over 90 days.

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

De Grey Mining  vs.  Techgen Metals

De Grey Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Techgen Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techgen Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with De Grey and Techgen Metals

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

The idea behind De Grey Mining and Techgen 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.