Correlation Between Cassiar Gold and Equity Metals

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

Diversification Opportunities for Cassiar Gold and Equity Metals

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cassiar and Equity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cassiar Gold Corp and Equity Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals Corp and Cassiar 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 Cassiar Gold Corp are associated (or correlated) with Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals Corp has no effect on the direction of Cassiar Gold i.e., Cassiar Gold and Equity Metals go up and down completely randomly.

Pair Corralation between Cassiar Gold and Equity Metals

Assuming the 90 days trading horizon Cassiar Gold Corp is expected to under-perform the Equity Metals. But the stock apears to be less risky and, when comparing its historical volatility, Cassiar Gold Corp is 1.99 times less risky than Equity Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Equity Metals Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Equity Metals Corp on October 24, 2024 and sell it today you would lose (4.00) from holding Equity Metals Corp or give up 16.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.8%
ValuesDaily Returns

Cassiar Gold Corp  vs.  Equity Metals Corp

 Performance 
       Timeline  
Cassiar Gold Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Cassiar Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Equity Metals Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Equity Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cassiar Gold and Equity Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cassiar Gold and Equity Metals

The main advantage of trading using opposite Cassiar Gold and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cassiar Gold position performs unexpectedly, Equity Metals 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 Equity Metals will offset losses from the drop in Equity Metals' long position.
The idea behind Cassiar Gold Corp and Equity Metals Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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