Correlation Between Golden Lake and Prime Meridian
Can any of the company-specific risk be diversified away by investing in both Golden Lake and Prime Meridian 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 Prime Meridian 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 Prime Meridian Resources, you can compare the effects of market volatilities on Golden Lake and Prime Meridian 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 Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Lake and Prime Meridian.
Diversification Opportunities for Golden Lake and Prime Meridian
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golden and Prime is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and Prime Meridian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Resources 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 Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Resources has no effect on the direction of Golden Lake i.e., Golden Lake and Prime Meridian go up and down completely randomly.
Pair Corralation between Golden Lake and Prime Meridian
Assuming the 90 days horizon Golden Lake Exploration is expected to under-perform the Prime Meridian. But the otc stock apears to be less risky and, when comparing its historical volatility, Golden Lake Exploration is 1.08 times less risky than Prime Meridian. The otc stock trades about -0.16 of its potential returns per unit of risk. The Prime Meridian Resources is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Prime Meridian Resources on August 26, 2024 and sell it today you would lose (4.00) from holding Prime Meridian Resources or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Lake Exploration vs. Prime Meridian Resources
Performance |
| Timeline |
| Golden Lake Exploration |
| Prime Meridian Resources |
Golden Lake and Prime Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Lake and Prime Meridian
The main advantage of trading using opposite Golden Lake and Prime Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Lake position performs unexpectedly, Prime Meridian 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 Prime Meridian will offset losses from the drop in Prime Meridian's long position.| Golden Lake vs. Norra Metals Corp | Golden Lake vs. ZincX Resources Corp | Golden Lake vs. Nuinsco Resources Limited | Golden Lake vs. South Star Battery |
| Prime Meridian vs. Aurion Resources | Prime Meridian vs. Liberty Gold Corp | Prime Meridian vs. Rio2 Limited | Prime Meridian vs. Orezone Gold 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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