Correlation Between Gemfields Group and Mirasol Resources

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

By analyzing existing cross correlation between Gemfields Group Limited and Mirasol Resources, you can compare the effects of market volatilities on Gemfields Group and Mirasol Resources 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 Gemfields Group with a short position of Mirasol Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemfields Group and Mirasol Resources.

Diversification Opportunities for Gemfields Group and Mirasol Resources

0.1

Correlation Coefficient

Gemfields Group  Mirasol Resources

Average diversification

The 3 months correlation between Gemfields and Mirasol is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gemfields Group Limited and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources and Gemfields Group 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 Gemfields Group Limited are associated (or correlated) with Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of Gemfields Group i.e., Gemfields Group and Mirasol Resources go up and down completely randomly.

Pair Corralation between Gemfields Group and Mirasol Resources

Assuming the 90 days horizon Gemfields Group Limited is expected to under-perform the Mirasol Resources. In addition to that, Gemfields Group is 1.63 times more volatile than Mirasol Resources. It trades about -0.12 of its total potential returns per unit of risk. Mirasol Resources is currently generating about 0.02 per unit of volatility. If you would invest  31.00  in Mirasol Resources on November 28, 2024 and sell it today you would earn a total of  0.00  from holding Mirasol Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.34%
Values	Daily Returns

Gemfields Group Limited  vs.  Mirasol Resources

Gemfields Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gemfields Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mirasol Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mirasol Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Mirasol Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gemfields Group and Mirasol Resources

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

The idea behind Gemfields Group Limited and Mirasol Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .