Correlation Between Freegold Ventures and Canstar Resources
Can any of the company-specific risk be diversified away by investing in both Freegold Ventures and Canstar Resources 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 Freegold Ventures and Canstar Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freegold Ventures Limited and Canstar Resources, you can compare the effects of market volatilities on Freegold Ventures and Canstar Resources 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 Freegold Ventures with a short position of Canstar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freegold Ventures and Canstar Resources.
Diversification Opportunities for Freegold Ventures and Canstar Resources
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freegold and Canstar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Freegold Ventures Limited and Canstar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canstar Resources and Freegold Ventures 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 Freegold Ventures Limited are associated (or correlated) with Canstar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canstar Resources has no effect on the direction of Freegold Ventures i.e., Freegold Ventures and Canstar Resources go up and down completely randomly.
Pair Corralation between Freegold Ventures and Canstar Resources
Assuming the 90 days horizon Freegold Ventures is expected to generate 1.5 times less return on investment than Canstar Resources. But when comparing it to its historical volatility, Freegold Ventures Limited is 2.65 times less risky than Canstar Resources. It trades about 0.05 of its potential returns per unit of risk. Canstar Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.15 in Canstar Resources on September 1, 2024 and sell it today you would lose (3.02) from holding Canstar Resources or give up 58.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.14% |
| Values | Daily Returns |
Freegold Ventures Limited vs. Canstar Resources
Performance |
| Timeline |
| Freegold Ventures |
| Canstar Resources |
Freegold Ventures and Canstar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freegold Ventures and Canstar Resources
The main advantage of trading using opposite Freegold Ventures and Canstar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freegold Ventures position performs unexpectedly, Canstar Resources 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 Canstar Resources will offset losses from the drop in Canstar Resources' long position.| Freegold Ventures vs. Mundoro Capital | Freegold Ventures vs. Norra Metals Corp | Freegold Ventures vs. E79 Resources Corp | Freegold Ventures vs. Voltage Metals Corp |
| Canstar Resources vs. Kenorland Minerals | Canstar Resources vs. Prime Mining Corp | Canstar Resources vs. Euro Manganese | Canstar Resources vs. Chalice Mining Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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