Correlation Between Geodrill and PJX Resources

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

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

Diversification Opportunities for Geodrill and PJX Resources

-0.74

Correlation Coefficient

Geodrill  PJX Resources

Pay attention - limited upside

The 3 months correlation between Geodrill and PJX is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Geodrill Limited and PJX Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJX Resources and Geodrill 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 Geodrill Limited are associated (or correlated) with PJX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJX Resources has no effect on the direction of Geodrill i.e., Geodrill and PJX Resources go up and down completely randomly.

Pair Corralation between Geodrill and PJX Resources

Assuming the 90 days trading horizon Geodrill Limited is expected to generate 0.29 times more return on investment than PJX Resources. However, Geodrill Limited is 3.45 times less risky than PJX Resources. It trades about 0.12 of its potential returns per unit of risk. PJX Resources is currently generating about -0.12 per unit of risk. If you would invest  265.00  in Geodrill Limited on September 14, 2024 and sell it today you would earn a total of  42.00  from holding Geodrill Limited or generate 15.85% return on investment over 90 days.

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

Geodrill Limited  vs.  PJX Resources

Geodrill Limited

Risk-Adjusted Performance

9 of 100

Good

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

PJX Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJX Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Geodrill and PJX Resources

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

The idea behind Geodrill Limited and PJX 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.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.