Correlation Between GMV Minerals and Bluestone Resources

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

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

Diversification Opportunities for GMV Minerals and Bluestone Resources

0.19

Correlation Coefficient

GMV Minerals  Bluestone Resources

Average diversification

The 3 months correlation between GMV and Bluestone is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GMV Minerals and Bluestone Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluestone Resources and GMV Minerals 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 GMV Minerals are associated (or correlated) with Bluestone Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluestone Resources has no effect on the direction of GMV Minerals i.e., GMV Minerals and Bluestone Resources go up and down completely randomly.

Pair Corralation between GMV Minerals and Bluestone Resources

Assuming the 90 days horizon GMV Minerals is expected to generate 1.88 times more return on investment than Bluestone Resources. However, GMV Minerals is 1.88 times more volatile than Bluestone Resources. It trades about 0.04 of its potential returns per unit of risk. Bluestone Resources is currently generating about 0.03 per unit of risk. If you would invest  8.98  in GMV Minerals on September 15, 2024 and sell it today you would lose (0.16) from holding GMV Minerals or give up 1.78% of portfolio value over 90 days.

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

GMV Minerals  vs.  Bluestone Resources

GMV Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMV Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GMV Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Bluestone Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bluestone Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bluestone Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GMV Minerals and Bluestone Resources

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

The idea behind GMV Minerals and Bluestone 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.