Correlation Between Golden Metal and Baker Steel
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Baker Steel 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 Golden Metal and Baker Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Baker Steel Resources, you can compare the effects of market volatilities on Golden Metal and Baker Steel 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 Golden Metal with a short position of Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Baker Steel.
Diversification Opportunities for Golden Metal and Baker Steel
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and Baker is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Golden Metal 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 Golden Metal Resources are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Golden Metal i.e., Golden Metal and Baker Steel go up and down completely randomly.
Pair Corralation between Golden Metal and Baker Steel
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 2.61 times more return on investment than Baker Steel. However, Golden Metal is 2.61 times more volatile than Baker Steel Resources. It trades about 0.17 of its potential returns per unit of risk. Baker Steel Resources is currently generating about 0.27 per unit of risk. If you would invest 2,500 in Golden Metal Resources on September 12, 2024 and sell it today you would earn a total of 500.00 from holding Golden Metal Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Baker Steel Resources
Performance |
| Timeline |
| Golden Metal Resources |
| Baker Steel Resources |
Golden Metal and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Baker Steel
The main advantage of trading using opposite Golden Metal and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel's long position.| Golden Metal vs. Givaudan SA | Golden Metal vs. Antofagasta PLC | Golden Metal vs. Ferrexpo PLC | Golden Metal vs. Atalaya Mining |
| Baker Steel vs. Samsung Electronics Co | Baker Steel vs. Samsung Electronics Co | Baker Steel vs. Hyundai Motor | Baker Steel vs. Toyota Motor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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