Correlation Between Geodrill and Foran Mining

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

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

Diversification Opportunities for Geodrill and Foran Mining

0.29

Correlation Coefficient

Geodrill  Foran Mining

Modest diversification

The 3 months correlation between Geodrill and Foran is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Geodrill Limited and Foran Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foran Mining and Geodrill 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 Geodrill Limited are associated (or correlated) with Foran Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foran Mining has no effect on the direction of Geodrill i.e., Geodrill and Foran Mining go up and down completely randomly.

Pair Corralation between Geodrill and Foran Mining

Assuming the 90 days trading horizon Geodrill is expected to generate 1.55 times less return on investment than Foran Mining. In addition to that, Geodrill is 1.13 times more volatile than Foran Mining. It trades about 0.02 of its total potential returns per unit of risk. Foran Mining is currently generating about 0.04 per unit of volatility. If you would invest  292.00  in Foran Mining on September 19, 2024 and sell it today you would earn a total of  121.00  from holding Foran Mining or generate 41.44% return on investment over 90 days.

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

Geodrill Limited  vs.  Foran Mining

Geodrill Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Geodrill Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Geodrill displayed solid returns over the last few months and may actually be approaching a breakup point.

Foran Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foran Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Foran Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Geodrill and Foran Mining

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

The idea behind Geodrill Limited and Foran Mining 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.