Correlation Between Golden Metal and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Golden Metal and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Caledonia Mining.
Diversification Opportunities for Golden Metal and Caledonia Mining
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Golden and Caledonia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Golden Metal i.e., Golden Metal and Caledonia Mining go up and down completely randomly.
Pair Corralation between Golden Metal and Caledonia Mining
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 1.76 times more return on investment than Caledonia Mining. However, Golden Metal is 1.76 times more volatile than Caledonia Mining. It trades about 0.03 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.07 per unit of risk. If you would invest 2,900 in Golden Metal Resources on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Golden Metal Resources or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Caledonia Mining
Performance |
| Timeline |
| Golden Metal Resources |
| Caledonia Mining |
Golden Metal and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Caledonia Mining
The main advantage of trading using opposite Golden Metal and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Golden Metal vs. Spotify Technology SA | Golden Metal vs. Darden Restaurants | Golden Metal vs. GoldMining | Golden Metal vs. Vitec Software Group |
| Caledonia Mining vs. Sabre Insurance Group | Caledonia Mining vs. Prudential Financial | Caledonia Mining vs. Sligro Food Group | Caledonia Mining vs. Royal Bank of |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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