Correlation Between Saint Jean and Geodrill

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

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

Diversification Opportunities for Saint Jean and Geodrill

0.18

Correlation Coefficient

Saint Jean  Geodrill

Average diversification

The 3 months correlation between Saint and Geodrill is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Saint Jean Carbon and Geodrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geodrill Limited and Saint Jean 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 Saint Jean Carbon are associated (or correlated) with Geodrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geodrill Limited has no effect on the direction of Saint Jean i.e., Saint Jean and Geodrill go up and down completely randomly.

Pair Corralation between Saint Jean and Geodrill

Assuming the 90 days horizon Saint Jean Carbon is expected to generate 12.15 times more return on investment than Geodrill. However, Saint Jean is 12.15 times more volatile than Geodrill Limited. It trades about 0.03 of its potential returns per unit of risk. Geodrill Limited is currently generating about -0.02 per unit of risk. If you would invest  2.40  in Saint Jean Carbon on December 29, 2024 and sell it today you would lose (1.09) from holding Saint Jean Carbon or give up 45.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Saint Jean Carbon  vs.  Geodrill Limited

Saint Jean Carbon

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Saint Jean Carbon are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Saint Jean reported solid returns over the last few months and may actually be approaching a breakup point.

Geodrill Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Saint Jean and Geodrill

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

The idea behind Saint Jean Carbon and Geodrill Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.