Correlation Between GDI Integrated and HudBay Minerals

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

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

Diversification Opportunities for GDI Integrated and HudBay Minerals

-0.56

Correlation Coefficient

GDI Integrated  HudBay Minerals

Excellent diversification

The 3 months correlation between GDI and HudBay is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and GDI Integrated 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 GDI Integrated are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of GDI Integrated i.e., GDI Integrated and HudBay Minerals go up and down completely randomly.

Pair Corralation between GDI Integrated and HudBay Minerals

Assuming the 90 days trading horizon GDI Integrated is expected to generate 0.46 times more return on investment than HudBay Minerals. However, GDI Integrated is 2.16 times less risky than HudBay Minerals. It trades about 0.48 of its potential returns per unit of risk. HudBay Minerals is currently generating about -0.03 per unit of risk. If you would invest  3,603  in GDI Integrated on October 4, 2024 and sell it today you would earn a total of  497.00  from holding GDI Integrated or generate 13.79% return on investment over 90 days.

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

GDI Integrated  vs.  HudBay Minerals

GDI Integrated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, GDI Integrated displayed solid returns over the last few months and may actually be approaching a breakup point.

HudBay Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HudBay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, HudBay Minerals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GDI Integrated and HudBay Minerals

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

The idea behind GDI Integrated and HudBay 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.