Correlation Between Goliath Resources and GMV Minerals

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

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

Diversification Opportunities for Goliath Resources and GMV Minerals

0.55

Correlation Coefficient

Goliath Resources  GMV Minerals

Very weak diversification

The 3 months correlation between Goliath and GMV is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Goliath Resources and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals and Goliath Resources 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 Goliath Resources are associated (or correlated) with GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of Goliath Resources i.e., Goliath Resources and GMV Minerals go up and down completely randomly.

Pair Corralation between Goliath Resources and GMV Minerals

Assuming the 90 days horizon Goliath Resources is expected to under-perform the GMV Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Goliath Resources is 2.56 times less risky than GMV Minerals. The stock trades about -0.05 of its potential returns per unit of risk. The GMV Minerals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  14.00  in GMV Minerals on October 8, 2024 and sell it today you would lose (3.00) from holding GMV Minerals or give up 21.43% of portfolio value over 90 days.

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

Goliath Resources  vs.  GMV Minerals

Goliath Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goliath Resources 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.

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.

Pair Trading with Goliath Resources and GMV Minerals

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

The idea behind Goliath Resources and GMV 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.