Correlation Between Western Alaska and Gemfields Group

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

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

Diversification Opportunities for Western Alaska and Gemfields Group

-0.02

Correlation Coefficient

Western Alaska  Gemfields Group

Good diversification

The 3 months correlation between Western and Gemfields is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Alaska Minerals and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Western Alaska 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 Western Alaska Minerals are associated (or correlated) with Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Western Alaska i.e., Western Alaska and Gemfields Group go up and down completely randomly.

Pair Corralation between Western Alaska and Gemfields Group

Assuming the 90 days horizon Western Alaska Minerals is expected to generate 1.15 times more return on investment than Gemfields Group. However, Western Alaska is 1.15 times more volatile than Gemfields Group Limited. It trades about 0.03 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.12 per unit of risk. If you would invest  43.00  in Western Alaska Minerals on November 28, 2024 and sell it today you would lose (1.00) from holding Western Alaska Minerals or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.32%
Values	Daily Returns

Western Alaska Minerals  vs.  Gemfields Group Limited

Western Alaska Minerals

Risk-Adjusted Performance

Weak

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

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.

Pair Trading with Western Alaska and Gemfields Group

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

The idea behind Western Alaska Minerals and Gemfields Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.