Correlation Between Cerrado Gold and Antioquia Gold
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Antioquia 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 Cerrado Gold and Antioquia Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Antioquia Gold, you can compare the effects of market volatilities on Cerrado Gold and Antioquia 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 Cerrado Gold with a short position of Antioquia Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Antioquia Gold.
Diversification Opportunities for Cerrado Gold and Antioquia Gold
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cerrado and Antioquia is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Antioquia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antioquia Gold and Cerrado 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 Cerrado Gold are associated (or correlated) with Antioquia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antioquia Gold has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Antioquia Gold go up and down completely randomly.
Pair Corralation between Cerrado Gold and Antioquia Gold
Assuming the 90 days horizon Cerrado Gold is expected to generate 0.83 times more return on investment than Antioquia Gold. However, Cerrado Gold is 1.2 times less risky than Antioquia Gold. It trades about 0.08 of its potential returns per unit of risk. Antioquia Gold is currently generating about 0.04 per unit of risk. If you would invest 17.00 in Cerrado Gold on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Cerrado Gold or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cerrado Gold vs. Antioquia Gold
Performance |
| Timeline |
| Cerrado Gold |
| Antioquia Gold |
Cerrado Gold and Antioquia Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Antioquia Gold
The main advantage of trading using opposite Cerrado Gold and Antioquia Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Antioquia 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 Antioquia Gold will offset losses from the drop in Antioquia Gold's long position.| Cerrado Gold vs. Aurion Resources | Cerrado Gold vs. Liberty Gold Corp | Cerrado Gold vs. Orezone Gold Corp | Cerrado Gold vs. Fortuna Silver Mines |
| Antioquia Gold vs. Ascendant Resources | Antioquia Gold vs. Cantex Mine Development | Antioquia Gold vs. Amarc Resources | Antioquia Gold vs. Sterling Metals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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