Correlation Between Eldorado Gold and QUALCOMM

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Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and QUALCOMM 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 Eldorado Gold and QUALCOMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eldorado Gold Corp and QUALCOMM INC 325, you can compare the effects of market volatilities on Eldorado Gold and QUALCOMM 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 Eldorado Gold with a short position of QUALCOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and QUALCOMM.

Diversification Opportunities for Eldorado Gold and QUALCOMM

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Eldorado and QUALCOMM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and QUALCOMM INC 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM INC 325 and Eldorado 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 Eldorado Gold Corp are associated (or correlated) with QUALCOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM INC 325 has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and QUALCOMM go up and down completely randomly.

Pair Corralation between Eldorado Gold and QUALCOMM

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the QUALCOMM. In addition to that, Eldorado Gold is 4.72 times more volatile than QUALCOMM INC 325. It trades about -0.07 of its total potential returns per unit of risk. QUALCOMM INC 325 is currently generating about -0.24 per unit of volatility. If you would invest  9,748  in QUALCOMM INC 325 on November 27, 2024 and sell it today you would lose (417.00) from holding QUALCOMM INC 325 or give up 4.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Eldorado Gold Corp  vs.  QUALCOMM INC 325

 Performance 
       Timeline  
Eldorado Gold Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
QUALCOMM INC 325 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days QUALCOMM INC 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, QUALCOMM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eldorado Gold and QUALCOMM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eldorado Gold and QUALCOMM

The main advantage of trading using opposite Eldorado Gold and QUALCOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, QUALCOMM 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 QUALCOMM will offset losses from the drop in QUALCOMM's long position.
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The idea behind Eldorado Gold Corp and QUALCOMM INC 325 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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