Correlation Between Group Ten and Globex Mining

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

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

Diversification Opportunities for Group Ten and Globex Mining

0.0

Correlation Coefficient

Group Ten  Globex Mining

Pay attention - limited upside

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

Pair Corralation between Group Ten and Globex Mining

Assuming the 90 days horizon Group Ten Metals is expected to generate 2.13 times more return on investment than Globex Mining. However, Group Ten is 2.13 times more volatile than Globex Mining Enterprises. It trades about 0.07 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.12 per unit of risk. If you would invest  8.00  in Group Ten Metals on December 28, 2024 and sell it today you would earn a total of  1.40  from holding Group Ten Metals or generate 17.5% return on investment over 90 days.

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

Group Ten Metals  vs.  Globex Mining Enterprises

Group Ten Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group Ten Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Group Ten reported solid returns over the last few months and may actually be approaching a breakup point.

Globex Mining Enterprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Globex Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Group Ten and Globex Mining

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

The idea behind Group Ten Metals and Globex Mining Enterprises 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.