Correlation Between Greenvale Mining and Summit Therapeutics

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

By analyzing existing cross correlation between Greenvale Mining Limited and Summit Therapeutics PLC, you can compare the effects of market volatilities on Greenvale Mining and Summit Therapeutics 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 Greenvale Mining with a short position of Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenvale Mining and Summit Therapeutics.

Diversification Opportunities for Greenvale Mining and Summit Therapeutics

-0.06

Correlation Coefficient

Greenvale Mining  Summit Therapeutics

Good diversification

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

Pair Corralation between Greenvale Mining and Summit Therapeutics

Assuming the 90 days horizon Greenvale Mining Limited is expected to under-perform the Summit Therapeutics. In addition to that, Greenvale Mining is 1.43 times more volatile than Summit Therapeutics PLC. It trades about -0.13 of its total potential returns per unit of risk. Summit Therapeutics PLC is currently generating about 0.04 per unit of volatility. If you would invest  1,867  in Summit Therapeutics PLC on December 21, 2024 and sell it today you would earn a total of  108.00  from holding Summit Therapeutics PLC or generate 5.78% return on investment over 90 days.

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

Greenvale Mining Limited  vs.  Summit Therapeutics PLC

Greenvale Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenvale Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Summit Therapeutics PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Therapeutics PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Summit Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greenvale Mining and Summit Therapeutics

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

The idea behind Greenvale Mining Limited and Summit Therapeutics PLC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.