Correlation Between Golden Lake and American Helium
Can any of the company-specific risk be diversified away by investing in both Golden Lake and American Helium 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 Lake and American Helium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Lake Exploration and American Helium, you can compare the effects of market volatilities on Golden Lake and American Helium 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 Lake with a short position of American Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Lake and American Helium.
Diversification Opportunities for Golden Lake and American Helium
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and American is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and American Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Helium and Golden Lake 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 Lake Exploration are associated (or correlated) with American Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Helium has no effect on the direction of Golden Lake i.e., Golden Lake and American Helium go up and down completely randomly.
Pair Corralation between Golden Lake and American Helium
Assuming the 90 days horizon Golden Lake Exploration is expected to under-perform the American Helium. In addition to that, Golden Lake is 4.57 times more volatile than American Helium. It trades about -0.08 of its total potential returns per unit of risk. American Helium is currently generating about 0.21 per unit of volatility. If you would invest 10.00 in American Helium on August 29, 2024 and sell it today you would earn a total of 1.00 from holding American Helium or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Lake Exploration vs. American Helium
Performance |
| Timeline |
| Golden Lake Exploration |
| American Helium |
Golden Lake and American Helium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Lake and American Helium
The main advantage of trading using opposite Golden Lake and American Helium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Lake position performs unexpectedly, American Helium 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 American Helium will offset losses from the drop in American Helium's long position.The idea behind Golden Lake Exploration and American Helium 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.| American Helium vs. Huntsman Exploration | American Helium vs. Aurelia Metals Limited | American Helium vs. Adriatic Metals PLC | American Helium vs. Progressive Planet Solutions |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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