Correlation Between Compania and Austral Gold
Can any of the company-specific risk be diversified away by investing in both Compania and Austral 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 Compania and Austral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Minas and Austral Gold Limited, you can compare the effects of market volatilities on Compania and Austral 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 Compania with a short position of Austral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Austral Gold.
Diversification Opportunities for Compania and Austral Gold
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compania and Austral is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Austral Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austral Gold Limited and Compania 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 Compania de Minas are associated (or correlated) with Austral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austral Gold Limited has no effect on the direction of Compania i.e., Compania and Austral Gold go up and down completely randomly.
Pair Corralation between Compania and Austral Gold
Considering the 90-day investment horizon Compania is expected to generate 31.24 times less return on investment than Austral Gold. But when comparing it to its historical volatility, Compania de Minas is 10.16 times less risky than Austral Gold. It trades about 0.03 of its potential returns per unit of risk. Austral Gold Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.06 in Austral Gold Limited on September 28, 2024 and sell it today you would earn a total of 0.14 from holding Austral Gold Limited or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Compania de Minas vs. Austral Gold Limited
Performance |
| Timeline |
| Compania de Minas |
| Austral Gold Limited |
Compania and Austral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Austral Gold
The main advantage of trading using opposite Compania and Austral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Austral 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 Austral Gold will offset losses from the drop in Austral Gold's long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
| Austral Gold vs. Compania de Minas | Austral Gold vs. Triple Flag Precious | Austral Gold vs. Zimplats Holdings Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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