Correlation Between GPM Metals and Imperial Metals

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

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

Diversification Opportunities for GPM Metals and Imperial Metals

0.0

Correlation Coefficient

GPM Metals  Imperial Metals

Pay attention - limited upside

The 3 months correlation between GPM and Imperial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GPM Metals and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals and GPM 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 GPM Metals are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of GPM Metals i.e., GPM Metals and Imperial Metals go up and down completely randomly.

Pair Corralation between GPM Metals and Imperial Metals

If you would invest  163.00  in Imperial Metals on February 2, 2024 and sell it today you would earn a total of  31.00  from holding Imperial Metals or generate 19.02% return on investment over 90 days.

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

GPM Metals  vs.  Imperial Metals

GPM Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Imperial Metals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Imperial Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GPM Metals and Imperial Metals

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

The idea behind GPM Metals and Imperial Metals 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.