Correlation Between Gold Road and CogState
Can any of the company-specific risk be diversified away by investing in both Gold Road and CogState 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 Gold Road and CogState into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and CogState, you can compare the effects of market volatilities on Gold Road and CogState 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 Gold Road with a short position of CogState. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and CogState.
Diversification Opportunities for Gold Road and CogState
Poor diversification
The 3 months correlation between Gold and CogState is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and CogState in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CogState and Gold Road 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 Gold Road Resources are associated (or correlated) with CogState. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CogState has no effect on the direction of Gold Road i.e., Gold Road and CogState go up and down completely randomly.
Pair Corralation between Gold Road and CogState
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 0.41 times more return on investment than CogState. However, Gold Road Resources is 2.42 times less risky than CogState. It trades about 0.76 of its potential returns per unit of risk. CogState is currently generating about 0.11 per unit of risk. If you would invest 206.00 in Gold Road Resources on October 23, 2024 and sell it today you would earn a total of 38.00 from holding Gold Road Resources or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Gold Road Resources vs. CogState
Performance |
| Timeline |
| Gold Road Resources |
| CogState |
Gold Road and CogState Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and CogState
The main advantage of trading using opposite Gold Road and CogState positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, CogState 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 CogState will offset losses from the drop in CogState's long position.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. De Grey Mining |
| CogState vs. Evolution Mining | CogState vs. Clime Investment Management | CogState vs. Metro Mining | CogState vs. Rand Mining |
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 CEOs Directory module to screen CEOs from public companies around the world.
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