Correlation Between Globe Metals and Talisman Mining

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

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

Diversification Opportunities for Globe Metals and Talisman Mining

-0.33

Correlation Coefficient

Globe Metals  Talisman Mining

Very good diversification

The 3 months correlation between Globe and Talisman is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman Mining and Globe 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 Globe Metals Mining are associated (or correlated) with Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Globe Metals i.e., Globe Metals and Talisman Mining go up and down completely randomly.

Pair Corralation between Globe Metals and Talisman Mining

Assuming the 90 days trading horizon Globe Metals is expected to generate 2.05 times less return on investment than Talisman Mining. In addition to that, Globe Metals is 1.06 times more volatile than Talisman Mining. It trades about 0.02 of its total potential returns per unit of risk. Talisman Mining is currently generating about 0.04 per unit of volatility. If you would invest  14.00  in Talisman Mining on September 25, 2024 and sell it today you would earn a total of  7.00  from holding Talisman Mining or generate 50.0% return on investment over 90 days.

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

Globe Metals Mining  vs.  Talisman Mining

Globe Metals Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Metals Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Globe Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Talisman Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talisman Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Globe Metals and Talisman Mining

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

The idea behind Globe Metals Mining and Talisman Mining 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.