Correlation Between Jervois Mining and Giga Metals

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

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

Diversification Opportunities for Jervois Mining and Giga Metals

0.09

Correlation Coefficient

Jervois Mining  Giga Metals

Significant diversification

The 3 months correlation between Jervois and Giga is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jervois Mining 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 Jervois 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 Jervois Mining 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 Jervois Mining i.e., Jervois Mining and Giga Metals go up and down completely randomly.

Pair Corralation between Jervois Mining and Giga Metals

Assuming the 90 days horizon Jervois Mining is expected to generate 2.11 times more return on investment than Giga Metals. However, Jervois Mining is 2.11 times more volatile than Giga Metals Corp. It trades about 0.04 of its potential returns per unit of risk. Giga Metals Corp is currently generating about -0.02 per unit of risk. If you would invest  1.00  in Jervois Mining on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Jervois Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Jervois Mining  vs.  Giga Metals Corp

Jervois Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jervois Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Jervois Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Giga Metals Corp

Risk-Adjusted Performance

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 fairly stable technical and fundamental indicators, Giga Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Jervois Mining and Giga Metals

The main advantage of trading using opposite Jervois Mining and Giga Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jervois Mining 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 Jervois Mining 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.