Correlation Between Faraday Copper and GMV Minerals

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

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

Diversification Opportunities for Faraday Copper and GMV Minerals

0.61

Correlation Coefficient

Faraday Copper  GMV Minerals

Poor diversification

The 3 months correlation between Faraday and GMV is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals and Faraday Copper 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 Faraday Copper Corp are associated (or correlated) with GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of Faraday Copper i.e., Faraday Copper and GMV Minerals go up and down completely randomly.

Pair Corralation between Faraday Copper and GMV Minerals

Assuming the 90 days trading horizon Faraday Copper is expected to generate 3.71 times less return on investment than GMV Minerals. But when comparing it to its historical volatility, Faraday Copper Corp is 3.73 times less risky than GMV Minerals. It trades about 0.05 of its potential returns per unit of risk. GMV Minerals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13.00  in GMV Minerals on September 4, 2024 and sell it today you would earn a total of  1.00  from holding GMV Minerals or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Faraday Copper Corp  vs.  GMV Minerals

Faraday Copper Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Faraday Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GMV Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMV Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, GMV Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and GMV Minerals

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

The idea behind Faraday Copper Corp and GMV Minerals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.