Correlation Between Filo Mining and Group Ten

Can any of the company-specific risk be diversified away by investing in both Filo Mining and Group Ten 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 Filo Mining and Group Ten into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Filo Mining and Group Ten

0.01

Correlation Coefficient

Filo Mining  Group Ten

Significant diversification

The 3 months correlation between Filo and Group is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Group Ten Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Ten Metals and Filo Mining 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 Filo Mining Corp are associated (or correlated) with Group Ten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Ten Metals has no effect on the direction of Filo Mining i.e., Filo Mining and Group Ten go up and down completely randomly.

Pair Corralation between Filo Mining and Group Ten

Assuming the 90 days horizon Filo Mining is expected to generate 19.16 times less return on investment than Group Ten. But when comparing it to its historical volatility, Filo Mining Corp is 9.33 times less risky than Group Ten. It trades about 0.03 of its potential returns per unit of risk. Group Ten Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.49  in Group Ten Metals on September 3, 2024 and sell it today you would earn a total of  1.51  from holding Group Ten Metals or generate 17.79% return on investment over 90 days.

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

Filo Mining Corp  vs.  Group Ten Metals

Filo Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Filo Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Group Ten Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group Ten Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Group Ten reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Filo Mining and Group Ten

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

The idea behind Filo Mining Corp and Group Ten 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.