Correlation Between Contact Gold and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Contact Gold and Cerrado 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 Contact Gold and Cerrado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Gold Corp and Cerrado Gold, you can compare the effects of market volatilities on Contact Gold and Cerrado 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 Contact Gold with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Gold and Cerrado Gold.
Diversification Opportunities for Contact Gold and Cerrado Gold
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Contact and Cerrado is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Contact Gold Corp and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold and Contact 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 Contact Gold Corp are associated (or correlated) with Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold has no effect on the direction of Contact Gold i.e., Contact Gold and Cerrado Gold go up and down completely randomly.
Pair Corralation between Contact Gold and Cerrado Gold
Assuming the 90 days horizon Contact Gold Corp is expected to generate 1.34 times more return on investment than Cerrado Gold. However, Contact Gold is 1.34 times more volatile than Cerrado Gold. It trades about 0.05 of its potential returns per unit of risk. Cerrado Gold is currently generating about 0.02 per unit of risk. If you would invest 1.51 in Contact Gold Corp on September 14, 2024 and sell it today you would lose (0.13) from holding Contact Gold Corp or give up 8.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 27.88% |
| Values | Daily Returns |
Contact Gold Corp vs. Cerrado Gold
Performance |
| Timeline |
| Contact Gold Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cerrado Gold |
Contact Gold and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Gold and Cerrado Gold
The main advantage of trading using opposite Contact Gold and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Gold position performs unexpectedly, Cerrado 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 Cerrado Gold will offset losses from the drop in Cerrado Gold's long position.| Contact Gold vs. Fremont Gold | Contact Gold vs. Norsemont Mining | Contact Gold vs. Hummingbird Resources PLC | Contact Gold vs. Tudor Gold Corp |
| Cerrado Gold vs. Revival Gold | Cerrado Gold vs. Galiano Gold | Cerrado Gold vs. US Gold Corp | Cerrado Gold vs. HUMANA INC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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