Correlation Between Grande Portage and Stelmine Canada

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

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

Diversification Opportunities for Grande Portage and Stelmine Canada

0.05

Correlation Coefficient

Grande Portage  Stelmine Canada

Significant diversification

The 3 months correlation between Grande and Stelmine is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada and Grande Portage 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 Grande Portage Resources are associated (or correlated) with Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Grande Portage i.e., Grande Portage and Stelmine Canada go up and down completely randomly.

Pair Corralation between Grande Portage and Stelmine Canada

Assuming the 90 days horizon Grande Portage Resources is expected to generate 0.7 times more return on investment than Stelmine Canada. However, Grande Portage Resources is 1.43 times less risky than Stelmine Canada. It trades about 0.02 of its potential returns per unit of risk. Stelmine Canada is currently generating about -0.01 per unit of risk. If you would invest  25.00  in Grande Portage Resources on October 7, 2024 and sell it today you would lose (5.00) from holding Grande Portage Resources or give up 20.0% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Stelmine Canada

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grande Portage is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stelmine Canada

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stelmine Canada are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stelmine Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Stelmine Canada

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

The idea behind Grande Portage Resources and Stelmine Canada 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.