Correlation Between St James and Gold Terra

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

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

Diversification Opportunities for St James and Gold Terra

-0.35

Correlation Coefficient

St James  Gold Terra

Very good diversification

The 3 months correlation between LRDJF and Gold is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding St James Gold and Gold Terra Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Terra Resource and St James 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 St James Gold are associated (or correlated) with Gold Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Terra Resource has no effect on the direction of St James i.e., St James and Gold Terra go up and down completely randomly.

Pair Corralation between St James and Gold Terra

Assuming the 90 days horizon St James Gold is expected to under-perform the Gold Terra. But the otc stock apears to be less risky and, when comparing its historical volatility, St James Gold is 1.57 times less risky than Gold Terra. The otc stock trades about -0.24 of its potential returns per unit of risk. The Gold Terra Resource is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4.42  in Gold Terra Resource on March 10, 2024 and sell it today you would earn a total of  1.45  from holding Gold Terra Resource or generate 32.81% return on investment over 90 days.

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

St James Gold  vs.  Gold Terra Resource

St James Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days St James Gold 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 forward-looking indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gold Terra Resource

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Terra Resource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Gold Terra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with St James and Gold Terra

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

The idea behind St James Gold and Gold Terra Resource 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.