Correlation Between GCM Resources and NACCO Industries

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

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

Diversification Opportunities for GCM Resources and NACCO Industries

0.0

Correlation Coefficient

GCM Resources  NACCO Industries

Pay attention - limited upside

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

Pair Corralation between GCM Resources and NACCO Industries

If you would invest  3,068  in NACCO Industries on September 4, 2024 and sell it today you would earn a total of  155.00  from holding NACCO Industries or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

GCM Resources Plc  vs.  NACCO Industries

GCM Resources Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

NACCO Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NACCO Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, NACCO Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Resources and NACCO Industries

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

The idea behind GCM Resources Plc and NACCO Industries 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.