Correlation Between GMK Norilskiy and Fortescue Metals

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

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

Diversification Opportunities for GMK Norilskiy and Fortescue Metals

0.0

Correlation Coefficient

GMK Norilskiy  Fortescue Metals

Pay attention - limited upside

The 3 months correlation between GMK and Fortescue is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GMK Norilskiy Nikel and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and GMK Norilskiy 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 GMK Norilskiy Nikel are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of GMK Norilskiy i.e., GMK Norilskiy and Fortescue Metals go up and down completely randomly.

Pair Corralation between GMK Norilskiy and Fortescue Metals

If you would invest (100.00) in GMK Norilskiy Nikel on December 27, 2024 and sell it today you would earn a total of  100.00  from holding GMK Norilskiy Nikel or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

GMK Norilskiy Nikel  vs.  Fortescue Metals Group

GMK Norilskiy Nikel

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMK Norilskiy Nikel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GMK Norilskiy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fortescue Metals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GMK Norilskiy and Fortescue Metals

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

The idea behind GMK Norilskiy Nikel and Fortescue Metals Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.