Correlation Between Grid Metals and Australian Strategic

Can any of the company-specific risk be diversified away by investing in both Grid Metals and Australian Strategic 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 Australian Strategic 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 Australian Strategic Materials, you can compare the effects of market volatilities on Grid Metals and Australian Strategic 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 Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Australian Strategic.

Diversification Opportunities for Grid Metals and Australian Strategic

0.24

Correlation Coefficient

Grid Metals  Australian Strategic

Modest diversification

The 3 months correlation between Grid and Australian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic 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 Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Grid Metals i.e., Grid Metals and Australian Strategic go up and down completely randomly.

Pair Corralation between Grid Metals and Australian Strategic

Assuming the 90 days horizon Grid Metals Corp is expected to under-perform the Australian Strategic. In addition to that, Grid Metals is 2.93 times more volatile than Australian Strategic Materials. It trades about -0.14 of its total potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.31 per unit of volatility. If you would invest  37.00  in Australian Strategic Materials on September 1, 2024 and sell it today you would lose (7.00) from holding Australian Strategic Materials or give up 18.92% 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.  Australian Strategic Materials

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Australian Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grid Metals and Australian Strategic

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

The idea behind Grid Metals Corp and Australian Strategic Materials 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 Global Correlations module to find global opportunities by holding instruments from different markets.