Correlation Between Geodrill and Ivanhoe Mines

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

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

Diversification Opportunities for Geodrill and Ivanhoe Mines

-0.2

Correlation Coefficient

Geodrill  Ivanhoe Mines

Good diversification

The 3 months correlation between Geodrill and Ivanhoe is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Geodrill Limited and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines 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 Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Geodrill i.e., Geodrill and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Geodrill and Ivanhoe Mines

Assuming the 90 days trading horizon Geodrill is expected to generate 1.94 times less return on investment than Ivanhoe Mines. In addition to that, Geodrill is 1.07 times more volatile than Ivanhoe Mines. It trades about 0.02 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.05 per unit of volatility. If you would invest  1,076  in Ivanhoe Mines on September 19, 2024 and sell it today you would earn a total of  611.00  from holding Ivanhoe Mines or generate 56.78% return on investment over 90 days.

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

Geodrill Limited  vs.  Ivanhoe Mines

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.

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ivanhoe Mines 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 Ivanhoe Mines

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

The idea behind Geodrill Limited and Ivanhoe Mines 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.