Correlation Between Grid Metals and Savannah Resources

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

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

Diversification Opportunities for Grid Metals and Savannah Resources

-0.02

Correlation Coefficient

Grid Metals  Savannah Resources

Good diversification

The 3 months correlation between Grid and Savannah is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Savannah Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savannah Resources Plc and Grid 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 Grid Metals Corp are associated (or correlated) with Savannah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savannah Resources Plc has no effect on the direction of Grid Metals i.e., Grid Metals and Savannah Resources go up and down completely randomly.

Pair Corralation between Grid Metals and Savannah Resources

Assuming the 90 days horizon Grid Metals Corp is expected to generate 1.14 times more return on investment than Savannah Resources. However, Grid Metals is 1.14 times more volatile than Savannah Resources Plc. It trades about 0.0 of its potential returns per unit of risk. Savannah Resources Plc is currently generating about -0.01 per unit of risk. If you would invest  2.97  in Grid Metals Corp on September 5, 2024 and sell it today you would lose (0.49) from holding Grid Metals Corp or give up 16.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Grid Metals Corp  vs.  Savannah Resources Plc

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Grid Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Savannah Resources Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Savannah Resources Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Savannah Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grid Metals and Savannah Resources

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

The idea behind Grid Metals Corp and Savannah Resources 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.