Correlation Between Aris Gold and China Gold

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

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

Diversification Opportunities for Aris Gold and China Gold

0.86

Correlation Coefficient

Aris Gold  China Gold

Very poor diversification

The 3 months correlation between Aris and China is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aris Gold Corp and China Gold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gold International and Aris Gold 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 Aris Gold Corp are associated (or correlated) with China Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gold International has no effect on the direction of Aris Gold i.e., Aris Gold and China Gold go up and down completely randomly.

Pair Corralation between Aris Gold and China Gold

Assuming the 90 days trading horizon Aris Gold is expected to generate 1.65 times less return on investment than China Gold. In addition to that, Aris Gold is 1.12 times more volatile than China Gold International. It trades about 0.05 of its total potential returns per unit of risk. China Gold International is currently generating about 0.09 per unit of volatility. If you would invest  320.00  in China Gold International on January 25, 2024 and sell it today you would earn a total of  488.00  from holding China Gold International or generate 152.5% return on investment over 90 days.

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

Aris Gold Corp  vs.  China Gold International

Aris Gold Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Gold Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aris Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

China Gold International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, China Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aris Gold and China Gold

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

The idea behind Aris Gold Corp and China Gold International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.