Correlation Between GFG Resources and Japan Gold
Can any of the company-specific risk be diversified away by investing in both GFG Resources and Japan 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 GFG Resources and Japan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFG Resources and Japan Gold Corp, you can compare the effects of market volatilities on GFG Resources and Japan 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 GFG Resources with a short position of Japan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFG Resources and Japan Gold.
Diversification Opportunities for GFG Resources and Japan Gold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GFG and Japan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GFG Resources and Japan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Gold Corp and GFG Resources 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 GFG Resources are associated (or correlated) with Japan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Gold Corp has no effect on the direction of GFG Resources i.e., GFG Resources and Japan Gold go up and down completely randomly.
Pair Corralation between GFG Resources and Japan Gold
Assuming the 90 days horizon GFG Resources is expected to under-perform the Japan Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, GFG Resources is 1.55 times less risky than Japan Gold. The otc stock trades about -0.22 of its potential returns per unit of risk. The Japan Gold Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5.80 in Japan Gold Corp on August 25, 2024 and sell it today you would lose (0.80) from holding Japan Gold Corp or give up 13.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFG Resources vs. Japan Gold Corp
Performance |
| Timeline |
| GFG Resources |
| Japan Gold Corp |
GFG Resources and Japan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFG Resources and Japan Gold
The main advantage of trading using opposite GFG Resources and Japan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFG Resources position performs unexpectedly, Japan 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 Japan Gold will offset losses from the drop in Japan Gold's long position.| GFG Resources vs. Japan Gold Corp | GFG Resources vs. Robex Resources | GFG Resources vs. Rover Metals Corp | GFG Resources vs. Orefinders Resources |
| Japan Gold vs. Aurion Resources | Japan Gold vs. Liberty Gold Corp | Japan Gold vs. Rio2 Limited | Japan Gold vs. Orezone 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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