Correlation Between Eramet SA and Eminent Gold
Can any of the company-specific risk be diversified away by investing in both Eramet SA and Eminent 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 Eramet SA and Eminent Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eramet SA ADR and Eminent Gold Corp, you can compare the effects of market volatilities on Eramet SA and Eminent 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 Eramet SA with a short position of Eminent Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eramet SA and Eminent Gold.
Diversification Opportunities for Eramet SA and Eminent Gold
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eramet and Eminent is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA ADR and Eminent Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Gold Corp and Eramet SA 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 Eramet SA ADR are associated (or correlated) with Eminent Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Gold Corp has no effect on the direction of Eramet SA i.e., Eramet SA and Eminent Gold go up and down completely randomly.
Pair Corralation between Eramet SA and Eminent Gold
Assuming the 90 days horizon Eramet SA ADR is expected to under-perform the Eminent Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eramet SA ADR is 1.97 times less risky than Eminent Gold. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Eminent Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Eminent Gold Corp on September 4, 2024 and sell it today you would earn a total of 5.00 from holding Eminent Gold Corp or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eramet SA ADR vs. Eminent Gold Corp
Performance |
| Timeline |
| Eramet SA ADR |
| Eminent Gold Corp |
Eramet SA and Eminent Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eramet SA and Eminent Gold
The main advantage of trading using opposite Eramet SA and Eminent Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eramet SA position performs unexpectedly, Eminent 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 Eminent Gold will offset losses from the drop in Eminent Gold's long position.| Eramet SA vs. Qubec Nickel Corp | Eramet SA vs. IGO Limited | Eramet SA vs. Avarone Metals | Eramet SA vs. Adriatic Metals PLC |
| Eminent Gold vs. Qubec Nickel Corp | Eminent Gold vs. IGO Limited | Eminent Gold vs. Avarone Metals | Eminent Gold vs. Adriatic Metals PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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