Correlation Between Chesapeake Gold and Galantas Gold
Can any of the company-specific risk be diversified away by investing in both Chesapeake Gold and Galantas 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 Chesapeake Gold and Galantas Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Gold Corp and Galantas Gold Corp, you can compare the effects of market volatilities on Chesapeake Gold and Galantas 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 Chesapeake Gold with a short position of Galantas Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Gold and Galantas Gold.
Diversification Opportunities for Chesapeake Gold and Galantas Gold
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Galantas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Gold Corp and Galantas Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galantas Gold Corp and Chesapeake 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 Chesapeake Gold Corp are associated (or correlated) with Galantas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galantas Gold Corp has no effect on the direction of Chesapeake Gold i.e., Chesapeake Gold and Galantas Gold go up and down completely randomly.
Pair Corralation between Chesapeake Gold and Galantas Gold
Assuming the 90 days horizon Chesapeake Gold Corp is expected to generate 0.8 times more return on investment than Galantas Gold. However, Chesapeake Gold Corp is 1.25 times less risky than Galantas Gold. It trades about 0.0 of its potential returns per unit of risk. Galantas Gold Corp is currently generating about -0.02 per unit of risk. If you would invest 169.00 in Chesapeake Gold Corp on August 31, 2024 and sell it today you would lose (68.00) from holding Chesapeake Gold Corp or give up 40.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Gold Corp vs. Galantas Gold Corp
Performance |
| Timeline |
| Chesapeake Gold Corp |
| Galantas Gold Corp |
Chesapeake Gold and Galantas Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Gold and Galantas Gold
The main advantage of trading using opposite Chesapeake Gold and Galantas Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Gold position performs unexpectedly, Galantas 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 Galantas Gold will offset losses from the drop in Galantas Gold's long position.| Chesapeake Gold vs. Bear Creek Mining | Chesapeake Gold vs. Spanish Mountain Gold | Chesapeake Gold vs. Kore Mining | Chesapeake Gold vs. Kootenay Silver |
| Galantas Gold vs. Grande Portage Resources | Galantas Gold vs. Stelmine Canada | Galantas Gold vs. Endurance Gold Corp | Galantas Gold vs. Dynasty Gold 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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