Correlation Between CANEX Metals and Gungnir Resources

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

By analyzing existing cross correlation between CANEX Metals and Gungnir Resources, you can compare the effects of market volatilities on CANEX Metals and Gungnir Resources 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 CANEX Metals with a short position of Gungnir Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANEX Metals and Gungnir Resources.

Diversification Opportunities for CANEX Metals and Gungnir Resources

0.23

Correlation Coefficient

CANEX Metals  Gungnir Resources

Modest diversification

The 3 months correlation between CANEX and Gungnir is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CANEX Metals and Gungnir Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gungnir Resources and CANEX Metals 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 CANEX Metals are associated (or correlated) with Gungnir Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gungnir Resources has no effect on the direction of CANEX Metals i.e., CANEX Metals and Gungnir Resources go up and down completely randomly.

Pair Corralation between CANEX Metals and Gungnir Resources

Assuming the 90 days trading horizon CANEX Metals is expected to generate 1.26 times less return on investment than Gungnir Resources. But when comparing it to its historical volatility, CANEX Metals is 1.14 times less risky than Gungnir Resources. It trades about 0.03 of its potential returns per unit of risk. Gungnir Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Gungnir Resources on September 15, 2024 and sell it today you would lose (1.00) from holding Gungnir Resources or give up 25.0% of portfolio value over 90 days.

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

CANEX Metals  vs.  Gungnir Resources

CANEX Metals

Risk-Adjusted Performance

2 of 100

Weak

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

Gungnir Resources

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with CANEX Metals and Gungnir Resources

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

The idea behind CANEX Metals and Gungnir Resources 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.