Correlation Between Grid Metals and Giga Metals

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

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

Diversification Opportunities for Grid Metals and Giga Metals

0.26

Correlation Coefficient

Grid Metals  Giga Metals

Modest diversification

The 3 months correlation between Grid and Giga is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Giga Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Metals Corp and Grid Metals 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 Grid Metals Corp are associated (or correlated) with Giga Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Metals Corp has no effect on the direction of Grid Metals i.e., Grid Metals and Giga Metals go up and down completely randomly.

Pair Corralation between Grid Metals and Giga Metals

Assuming the 90 days trading horizon Grid Metals Corp is expected to under-perform the Giga Metals. In addition to that, Grid Metals is 1.16 times more volatile than Giga Metals Corp. It trades about -0.02 of its total potential returns per unit of risk. Giga Metals Corp is currently generating about -0.02 per unit of volatility. If you would invest  30.00  in Giga Metals Corp on September 14, 2024 and sell it today you would lose (19.00) from holding Giga Metals Corp or give up 63.33% of portfolio value over 90 days.

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

Grid Metals Corp  vs.  Giga Metals Corp

Grid Metals Corp

Risk-Adjusted Performance

4 of 100

Insignificant

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

Giga Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental 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 Grid Metals and Giga Metals

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

The idea behind Grid Metals Corp and Giga Metals Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.