Correlation Between Compania and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both Compania and Outcrop 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 Outcrop 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 Outcrop Gold Corp, you can compare the effects of market volatilities on Compania and Outcrop 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Outcrop Gold.
Diversification Opportunities for Compania and Outcrop Gold
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compania and Outcrop is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold Corp 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Compania i.e., Compania and Outcrop Gold go up and down completely randomly.
Pair Corralation between Compania and Outcrop Gold
Considering the 90-day investment horizon Compania de Minas is expected to generate 0.37 times more return on investment than Outcrop Gold. However, Compania de Minas is 2.71 times less risky than Outcrop Gold. It trades about -0.16 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about -0.09 per unit of risk. If you would invest 1,287 in Compania de Minas on September 4, 2024 and sell it today you would lose (82.00) from holding Compania de Minas or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Compania de Minas vs. Outcrop Gold Corp
Performance |
| Timeline |
| Compania de Minas |
| Outcrop Gold Corp |
Compania and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Outcrop Gold
The main advantage of trading using opposite Compania and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Outcrop 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
| Outcrop Gold vs. CMC Metals | Outcrop Gold vs. Capitan Mining | Outcrop Gold vs. Cartier Iron Corp | Outcrop Gold vs. Alien Metals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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