Correlation Between RED HILL and GALENA MINING

Can any of the company-specific risk be diversified away by investing in both RED HILL and GALENA 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 RED HILL and GALENA MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RED HILL IRON and GALENA MINING LTD, you can compare the effects of market volatilities on RED HILL and GALENA 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 RED HILL with a short position of GALENA MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of RED HILL and GALENA MINING.

Diversification Opportunities for RED HILL and GALENA MINING

1.0

Correlation Coefficient

RED HILL  GALENA MINING

No risk reduction

The 3 months correlation between RED and GALENA is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding RED HILL IRON and GALENA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALENA MINING LTD and RED HILL 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 RED HILL IRON are associated (or correlated) with GALENA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALENA MINING LTD has no effect on the direction of RED HILL i.e., RED HILL and GALENA MINING go up and down completely randomly.

Pair Corralation between RED HILL and GALENA MINING

If you would invest  3.05  in GALENA MINING LTD on December 19, 2024 and sell it today you would earn a total of  0.00  from holding GALENA MINING LTD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.31%
Values	Daily Returns

RED HILL IRON  vs.  GALENA MINING LTD

RED HILL IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days RED HILL IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, RED HILL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

GALENA MINING LTD

Risk-Adjusted Performance

Very Weak

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

Pair Trading with RED HILL and GALENA MINING

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

The idea behind RED HILL IRON and GALENA MINING LTD 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.