Correlation Between Transatlantic Mining and GMV Minerals

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

By analyzing existing cross correlation between Transatlantic Mining Corp and GMV Minerals, you can compare the effects of market volatilities on Transatlantic Mining and GMV Minerals 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 Transatlantic Mining with a short position of GMV Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transatlantic Mining and GMV Minerals.

Diversification Opportunities for Transatlantic Mining and GMV Minerals

0.06

Correlation Coefficient

Transatlantic Mining  GMV Minerals

Significant diversification

The 3 months correlation between Transatlantic and GMV is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Transatlantic Mining Corp and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals and Transatlantic Mining 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 Transatlantic Mining Corp are associated (or correlated) with GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of Transatlantic Mining i.e., Transatlantic Mining and GMV Minerals go up and down completely randomly.

Pair Corralation between Transatlantic Mining and GMV Minerals

Assuming the 90 days horizon Transatlantic Mining Corp is expected to generate 0.67 times more return on investment than GMV Minerals. However, Transatlantic Mining Corp is 1.48 times less risky than GMV Minerals. It trades about -0.16 of its potential returns per unit of risk. GMV Minerals is currently generating about -0.11 per unit of risk. If you would invest  8.00  in Transatlantic Mining Corp on October 9, 2024 and sell it today you would lose (1.00) from holding Transatlantic Mining Corp or give up 12.5% of portfolio value over 90 days.

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

Transatlantic Mining Corp  vs.  GMV Minerals

Transatlantic Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transatlantic Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Transatlantic Mining showed solid returns over the last few months and may actually be approaching a breakup point.

GMV Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMV Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GMV Minerals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Transatlantic Mining and GMV Minerals

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

The idea behind Transatlantic Mining Corp and GMV Minerals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.