Correlation Between Nine Mile and GMV Minerals

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

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

Diversification Opportunities for Nine Mile and GMV Minerals

0.61

Correlation Coefficient

Nine Mile  GMV Minerals

Poor diversification

The 3 months correlation between Nine and GMV is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nine Mile Metals and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals and Nine Mile 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 Nine Mile Metals are associated (or correlated) with GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of Nine Mile i.e., Nine Mile and GMV Minerals go up and down completely randomly.

Pair Corralation between Nine Mile and GMV Minerals

Assuming the 90 days horizon Nine Mile Metals is expected to under-perform the GMV Minerals. In addition to that, Nine Mile is 1.17 times more volatile than GMV Minerals. It trades about -0.02 of its total potential returns per unit of risk. GMV Minerals is currently generating about 0.04 per unit of volatility. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Nine Mile Metals  vs.  GMV Minerals

Nine Mile Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Mile Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Nine Mile and GMV Minerals

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

The idea behind Nine Mile Metals and GMV Minerals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.