Correlation Between Gelsenwasser and Endeavour Mining

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

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

Diversification Opportunities for Gelsenwasser and Endeavour Mining

0.57

Correlation Coefficient

Gelsenwasser  Endeavour Mining

Very weak diversification

The 3 months correlation between Gelsenwasser and Endeavour is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and Endeavour Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining PLC and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining PLC has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and Endeavour Mining go up and down completely randomly.

Pair Corralation between Gelsenwasser and Endeavour Mining

Assuming the 90 days horizon Gelsenwasser is expected to generate 5.6 times less return on investment than Endeavour Mining. But when comparing it to its historical volatility, Gelsenwasser AG is 1.35 times less risky than Endeavour Mining. It trades about 0.03 of its potential returns per unit of risk. Endeavour Mining PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,722  in Endeavour Mining PLC on December 26, 2024 and sell it today you would earn a total of  340.00  from holding Endeavour Mining PLC or generate 19.74% return on investment over 90 days.

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

Gelsenwasser AG  vs.  Endeavour Mining PLC

Gelsenwasser AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gelsenwasser AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gelsenwasser is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Endeavour Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Endeavour Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gelsenwasser and Endeavour Mining

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

The idea behind Gelsenwasser AG and Endeavour Mining PLC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.