Correlation Between Gem Diamonds and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Gem Diamonds and GoGold 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 Gem Diamonds and GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Diamonds Limited and GoGold Resources, you can compare the effects of market volatilities on Gem Diamonds and GoGold 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 Gem Diamonds with a short position of GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Diamonds and GoGold Resources.
Diversification Opportunities for Gem Diamonds and GoGold Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gem and GoGold is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gem Diamonds Limited and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and Gem Diamonds 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 Gem Diamonds Limited are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Gem Diamonds i.e., Gem Diamonds and GoGold Resources go up and down completely randomly.
Pair Corralation between Gem Diamonds and GoGold Resources
Assuming the 90 days horizon Gem Diamonds Limited is expected to under-perform the GoGold Resources. In addition to that, Gem Diamonds is 1.71 times more volatile than GoGold Resources. It trades about -0.22 of its total potential returns per unit of risk. GoGold Resources is currently generating about -0.36 per unit of volatility. If you would invest 113.00 in GoGold Resources on September 1, 2024 and sell it today you would lose (22.00) from holding GoGold Resources or give up 19.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gem Diamonds Limited vs. GoGold Resources
Performance |
| Timeline |
| Gem Diamonds Limited |
| GoGold Resources |
Gem Diamonds and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gem Diamonds and GoGold Resources
The main advantage of trading using opposite Gem Diamonds and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Diamonds position performs unexpectedly, GoGold 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Gem Diamonds vs. Defiance Silver Corp | Gem Diamonds vs. HUMANA INC | Gem Diamonds vs. SCOR PK | Gem Diamonds vs. Aquagold International |
| GoGold Resources vs. South32 Limited | GoGold Resources vs. NioCorp Developments Ltd | GoGold Resources vs. HUMANA INC | GoGold Resources vs. SCOR PK |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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