Correlation Between China Gold and Aris Gold

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Can any of the company-specific risk be diversified away by investing in both China Gold and Aris 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 China Gold and Aris Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Gold International and Aris Gold Corp, you can compare the effects of market volatilities on China Gold and Aris 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 China Gold with a short position of Aris Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Gold and Aris Gold.

Diversification Opportunities for China Gold and Aris Gold

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between China and Aris is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Gold International and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp and China 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 China Gold International are associated (or correlated) with Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of China Gold i.e., China Gold and Aris Gold go up and down completely randomly.

Pair Corralation between China Gold and Aris Gold

Assuming the 90 days trading horizon China Gold International is expected to generate 1.03 times more return on investment than Aris Gold. However, China Gold is 1.03 times more volatile than Aris Gold Corp. It trades about 0.58 of its potential returns per unit of risk. Aris Gold Corp is currently generating about 0.49 per unit of risk. If you would invest  629.00  in China Gold International on December 30, 2023 and sell it today you would earn a total of  235.00  from holding China Gold International or generate 37.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

China Gold International  vs.  Aris Gold Corp

 Performance 
       Timeline  
China Gold International 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, China Gold displayed solid returns over the last few months and may actually be approaching a breakup point.
Aris Gold Corp 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aris Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Aris Gold may actually be approaching a critical reversion point that can send shares even higher in April 2024.

China Gold and Aris Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Gold and Aris Gold

The main advantage of trading using opposite China Gold and Aris Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Gold position performs unexpectedly, Aris 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 Aris Gold will offset losses from the drop in Aris Gold's long position.
The idea behind China Gold International and Aris Gold Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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