Correlation Between NorthIsle Copper and China Gold
Can any of the company-specific risk be diversified away by investing in both NorthIsle Copper 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 NorthIsle Copper and China Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthIsle Copper and and China Gold International, you can compare the effects of market volatilities on NorthIsle Copper 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 NorthIsle Copper with a short position of China Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthIsle Copper and China Gold.
Diversification Opportunities for NorthIsle Copper and China Gold
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NorthIsle and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NorthIsle Copper and 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 NorthIsle Copper 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 NorthIsle Copper and 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 NorthIsle Copper i.e., NorthIsle Copper and China Gold go up and down completely randomly.
Pair Corralation between NorthIsle Copper and China Gold
Assuming the 90 days horizon NorthIsle Copper and is expected to under-perform the China Gold. In addition to that, NorthIsle Copper is 2.05 times more volatile than China Gold International. It trades about -0.14 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 848.00 in China Gold International on February 2, 2024 and sell it today you would lose (47.00) from holding China Gold International or give up 5.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NorthIsle Copper and vs. China Gold International
Performance |
Timeline |
NorthIsle Copper |
China Gold International |
NorthIsle Copper and China Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NorthIsle Copper and China Gold
The main advantage of trading using opposite NorthIsle Copper and China Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthIsle Copper 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.NorthIsle Copper vs. Midnight Sun Mining | NorthIsle Copper vs. Thunderstruck Resources | NorthIsle Copper vs. New Destiny Mining | NorthIsle Copper vs. Eros Resources Corp |
China Gold vs. International Tower Hill | China Gold vs. Dundee Precious Metals | China Gold vs. Centerra Gold | China Gold vs. Loncor Resources |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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