Correlation Between Arctic Gold and Northgold
Can any of the company-specific risk be diversified away by investing in both Arctic Gold and Northgold 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 Arctic Gold and Northgold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Gold Publ and Northgold AB, you can compare the effects of market volatilities on Arctic Gold and Northgold 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 Arctic Gold with a short position of Northgold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Northgold.
Diversification Opportunities for Arctic Gold and Northgold
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arctic and Northgold is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ and Northgold AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northgold AB and Arctic 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 Arctic Gold Publ are associated (or correlated) with Northgold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northgold AB has no effect on the direction of Arctic Gold i.e., Arctic Gold and Northgold go up and down completely randomly.
Pair Corralation between Arctic Gold and Northgold
Assuming the 90 days trading horizon Arctic Gold Publ is expected to generate 0.95 times more return on investment than Northgold. However, Arctic Gold Publ is 1.05 times less risky than Northgold. It trades about 0.01 of its potential returns per unit of risk. Northgold AB is currently generating about -0.07 per unit of risk. If you would invest 54.00 in Arctic Gold Publ on August 29, 2024 and sell it today you would lose (23.00) from holding Arctic Gold Publ or give up 42.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Gold Publ vs. Northgold AB
Performance |
| Timeline |
| Arctic Gold Publ |
| Northgold AB |
Arctic Gold and Northgold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Gold and Northgold
The main advantage of trading using opposite Arctic Gold and Northgold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Gold position performs unexpectedly, Northgold 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 Northgold will offset losses from the drop in Northgold's long position.| Arctic Gold vs. Bjorn Borg AB | Arctic Gold vs. Diadrom Holding AB | Arctic Gold vs. Anoto Group AB | Arctic Gold vs. Cloetta AB |
| Northgold vs. Filo Mining Corp | Northgold vs. Arctic Gold Publ | Northgold vs. BE Group AB | Northgold vs. Africa Oil Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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