Correlation Between Kestrel Gold and GMV Minerals

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

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

Diversification Opportunities for Kestrel Gold and GMV Minerals

0.27

Correlation Coefficient

Kestrel Gold  GMV Minerals

Modest diversification

The 3 months correlation between Kestrel and GMV is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kestrel Gold and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals and Kestrel Gold 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 Kestrel Gold are associated (or correlated) with GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of Kestrel Gold i.e., Kestrel Gold and GMV Minerals go up and down completely randomly.

Pair Corralation between Kestrel Gold and GMV Minerals

Assuming the 90 days horizon Kestrel Gold is expected to generate 1.39 times more return on investment than GMV Minerals. However, Kestrel Gold is 1.39 times more volatile than GMV Minerals. It trades about 0.05 of its potential returns per unit of risk. GMV Minerals is currently generating about 0.01 per unit of risk. If you would invest  3.00  in Kestrel Gold on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Kestrel Gold or generate 0.0% return on investment over 90 days.

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

Kestrel Gold  vs.  GMV Minerals

Kestrel Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kestrel Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kestrel Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GMV Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMV Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic 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 Kestrel Gold and GMV Minerals

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

The idea behind Kestrel Gold and GMV Minerals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.