Correlation Between Gold79 Mines and Laramide Resources

Can any of the company-specific risk be diversified away by investing in both Gold79 Mines and Laramide Resources 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 Gold79 Mines and Laramide Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold79 Mines and Laramide Resources, you can compare the effects of market volatilities on Gold79 Mines and Laramide Resources 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 Gold79 Mines with a short position of Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold79 Mines and Laramide Resources.

Diversification Opportunities for Gold79 Mines and Laramide Resources

-0.3

Correlation Coefficient

Gold79 Mines  Laramide Resources

Very good diversification

The 3 months correlation between Gold79 and Laramide is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gold79 Mines and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Gold79 Mines 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 Gold79 Mines are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Gold79 Mines i.e., Gold79 Mines and Laramide Resources go up and down completely randomly.

Pair Corralation between Gold79 Mines and Laramide Resources

Assuming the 90 days horizon Gold79 Mines is expected to generate 2.59 times more return on investment than Laramide Resources. However, Gold79 Mines is 2.59 times more volatile than Laramide Resources. It trades about 0.0 of its potential returns per unit of risk. Laramide Resources is currently generating about 0.01 per unit of risk. If you would invest  30.00  in Gold79 Mines on March 6, 2024 and sell it today you would lose (6.00) from holding Gold79 Mines or give up 20.0% of portfolio value over 90 days.

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

Gold79 Mines  vs.  Laramide Resources

Gold79 Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold79 Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gold79 Mines is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Laramide Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laramide Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Laramide Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gold79 Mines and Laramide Resources

The main advantage of trading using opposite Gold79 Mines and Laramide Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold79 Mines position performs unexpectedly, Laramide Resources 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 Laramide Resources will offset losses from the drop in Laramide Resources' long position.

The idea behind Gold79 Mines and Laramide Resources 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.