Correlation Between GoldMining and Tetragon Financial

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

Diversification Opportunities for GoldMining and Tetragon Financial

GoldMiningTetragonDiversified AwayGoldMiningTetragonDiversified Away100%
-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GoldMining and Tetragon is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and GoldMining 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 GoldMining are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of GoldMining i.e., GoldMining and Tetragon Financial go up and down completely randomly.

Pair Corralation between GoldMining and Tetragon Financial

Assuming the 90 days trading horizon GoldMining is expected to generate 3.25 times less return on investment than Tetragon Financial. In addition to that, GoldMining is 2.38 times more volatile than Tetragon Financial Group. It trades about 0.02 of its total potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.17 per unit of volatility. If you would invest  946.00  in Tetragon Financial Group on November 21, 2024 and sell it today you would earn a total of  634.00  from holding Tetragon Financial Group or generate 67.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy51.75%
ValuesDaily Returns

GoldMining  vs.  Tetragon Financial Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.150UYN TFG
       Timeline  
GoldMining 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GoldMining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Tetragon Financial 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tetragon Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb12.51313.51414.51515.51616.5

GoldMining and Tetragon Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.12-3.08-2.05-1.020.01.02.03.04.0 0.050.100.15
JavaScript chart by amCharts 3.21.150UYN TFG
       Returns  

Pair Trading with GoldMining and Tetragon Financial

The main advantage of trading using opposite GoldMining and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.
The idea behind GoldMining and Tetragon Financial Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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