Correlation Between Generation Mining and American Manganese

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

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

Diversification Opportunities for Generation Mining and American Manganese

-0.12

Correlation Coefficient

Generation Mining  American Manganese

Good diversification

The 3 months correlation between Generation and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Generation Mining Limited and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese and Generation 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 Generation Mining Limited are associated (or correlated) with American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Generation Mining i.e., Generation Mining and American Manganese go up and down completely randomly.

Pair Corralation between Generation Mining and American Manganese

Assuming the 90 days horizon Generation Mining Limited is expected to under-perform the American Manganese. In addition to that, Generation Mining is 1.05 times more volatile than American Manganese. It trades about -0.08 of its total potential returns per unit of risk. American Manganese is currently generating about 0.01 per unit of volatility. If you would invest  6.70  in American Manganese on October 21, 2024 and sell it today you would lose (0.78) from holding American Manganese or give up 11.64% of portfolio value over 90 days.

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

Generation Mining Limited  vs.  American Manganese

Generation Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Manganese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Manganese has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American Manganese is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Generation Mining and American Manganese

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

The idea behind Generation Mining Limited and American Manganese 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..