Correlation Between Eldorado Gold and Zedge

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

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

Diversification Opportunities for Eldorado Gold and Zedge

-0.8

Correlation Coefficient

Eldorado Gold  Zedge

Pay attention - limited upside

The 3 months correlation between Eldorado and Zedge is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc and Eldorado 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 Eldorado Gold Corp are associated (or correlated) with Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Zedge go up and down completely randomly.

Pair Corralation between Eldorado Gold and Zedge

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.63 times more return on investment than Zedge. However, Eldorado Gold Corp is 1.59 times less risky than Zedge. It trades about 0.14 of its potential returns per unit of risk. Zedge Inc is currently generating about -0.08 per unit of risk. If you would invest  1,349  in Eldorado Gold Corp on January 25, 2024 and sell it today you would earn a total of  85.00  from holding Eldorado Gold Corp or generate 6.3% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Zedge Inc

Eldorado Gold Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Zedge Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zedge Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Zedge may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Eldorado Gold and Zedge

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

The idea behind Eldorado Gold Corp and Zedge Inc 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.