Correlation Between Great Atlantic and Lomiko Metals

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

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

Diversification Opportunities for Great Atlantic and Lomiko Metals

-0.06

Correlation Coefficient

Great Atlantic  Lomiko Metals

Good diversification

The 3 months correlation between Great and Lomiko is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Great Atlantic Resources and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals and Great Atlantic 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 Great Atlantic Resources are associated (or correlated) with Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Great Atlantic i.e., Great Atlantic and Lomiko Metals go up and down completely randomly.

Pair Corralation between Great Atlantic and Lomiko Metals

Given the investment horizon of 90 days Great Atlantic is expected to generate 5.42 times less return on investment than Lomiko Metals. In addition to that, Great Atlantic is 1.23 times more volatile than Lomiko Metals. It trades about 0.01 of its total potential returns per unit of risk. Lomiko Metals is currently generating about 0.08 per unit of volatility. If you would invest  13.00  in Lomiko Metals on December 26, 2024 and sell it today you would earn a total of  3.00  from holding Lomiko Metals or generate 23.08% return on investment over 90 days.

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

Great Atlantic Resources  vs.  Lomiko Metals

Great Atlantic Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Atlantic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Great Atlantic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lomiko Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lomiko Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lomiko Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Atlantic and Lomiko Metals

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

The idea behind Great Atlantic Resources and Lomiko Metals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.