Correlation Between Globe Metals and Itech Minerals

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

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

Diversification Opportunities for Globe Metals and Itech Minerals

0.13

Correlation Coefficient

Globe Metals  Itech Minerals

Average diversification

The 3 months correlation between Globe and Itech is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals and Globe 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 Globe Metals Mining are associated (or correlated) with Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Globe Metals i.e., Globe Metals and Itech Minerals go up and down completely randomly.

Pair Corralation between Globe Metals and Itech Minerals

Assuming the 90 days trading horizon Globe Metals Mining is expected to generate 1.26 times more return on investment than Itech Minerals. However, Globe Metals is 1.26 times more volatile than Itech Minerals. It trades about -0.02 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.16 per unit of risk. If you would invest  4.30  in Globe Metals Mining on October 6, 2024 and sell it today you would lose (0.30) from holding Globe Metals Mining or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Globe Metals Mining  vs.  Itech Minerals

Globe Metals Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Metals Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Globe Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Itech Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itech Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Globe Metals and Itech Minerals

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

The idea behind Globe Metals Mining and Itech 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.