Correlation Between Vulcan Steel and Gateway Mining

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

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

Diversification Opportunities for Vulcan Steel and Gateway Mining

0.28

Correlation Coefficient

Vulcan Steel  Gateway Mining

Modest diversification

The 3 months correlation between Vulcan and Gateway is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Steel and Gateway Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Mining and Vulcan Steel 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 Vulcan Steel are associated (or correlated) with Gateway Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Mining has no effect on the direction of Vulcan Steel i.e., Vulcan Steel and Gateway Mining go up and down completely randomly.

Pair Corralation between Vulcan Steel and Gateway Mining

Assuming the 90 days trading horizon Vulcan Steel is expected to under-perform the Gateway Mining. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Steel is 1.38 times less risky than Gateway Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Gateway Mining is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Gateway Mining on April 22, 2025 and sell it today you would lose (0.40) from holding Gateway Mining or give up 13.33% of portfolio value over 90 days.

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

Vulcan Steel  vs.  Gateway Mining

Vulcan Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gateway Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gateway Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vulcan Steel and Gateway Mining

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

The idea behind Vulcan Steel and Gateway 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.