Correlation Between FIREWEED METALS and De Grey

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

By analyzing existing cross correlation between FIREWEED METALS P and De Grey Mining, you can compare the effects of market volatilities on FIREWEED METALS and De Grey 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 FIREWEED METALS with a short position of De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and De Grey.

Diversification Opportunities for FIREWEED METALS and De Grey

0.5

Correlation Coefficient

FIREWEED METALS  De Grey

Very weak diversification

The 3 months correlation between FIREWEED and DGD is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and FIREWEED 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 FIREWEED METALS P are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of FIREWEED METALS i.e., FIREWEED METALS and De Grey go up and down completely randomly.

Pair Corralation between FIREWEED METALS and De Grey

Assuming the 90 days horizon FIREWEED METALS is expected to generate 10.47 times less return on investment than De Grey. In addition to that, FIREWEED METALS is 1.47 times more volatile than De Grey Mining. It trades about 0.01 of its total potential returns per unit of risk. De Grey Mining is currently generating about 0.09 per unit of volatility. If you would invest  109.00  in De Grey Mining on January 7, 2025 and sell it today you would earn a total of  13.00  from holding De Grey Mining or generate 11.93% return on investment over 90 days.

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

FIREWEED METALS P  vs.  De Grey Mining

FIREWEED METALS P

Risk-Adjusted Performance

Very Weak

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

De Grey Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, De Grey may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with FIREWEED METALS and De Grey

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

The idea behind FIREWEED METALS P and De Grey Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.