Correlation Between GMV Minerals and Kestrel Gold

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

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

Diversification Opportunities for GMV Minerals and Kestrel Gold

0.27

Correlation Coefficient

GMV Minerals  Kestrel Gold

Modest diversification

The 3 months correlation between GMV and Kestrel is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GMV Minerals and Kestrel Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kestrel Gold and GMV Minerals 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 GMV Minerals are associated (or correlated) with Kestrel Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kestrel Gold has no effect on the direction of GMV Minerals i.e., GMV Minerals and Kestrel Gold go up and down completely randomly.

Pair Corralation between GMV Minerals and Kestrel Gold

Assuming the 90 days horizon GMV Minerals is expected to under-perform the Kestrel Gold. But the stock apears to be less risky and, when comparing its historical volatility, GMV Minerals is 1.44 times less risky than Kestrel Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Kestrel Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Kestrel Gold on October 8, 2024 and sell it today you would lose (1.00) from holding Kestrel Gold or give up 25.0% of portfolio value over 90 days.

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

GMV Minerals  vs.  Kestrel Gold

GMV Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMV Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Kestrel Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kestrel Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kestrel Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GMV Minerals and Kestrel Gold

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

The idea behind GMV Minerals and Kestrel Gold 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.