Correlation Between Gold Road and Mach7 Technologies
Can any of the company-specific risk be diversified away by investing in both Gold Road and Mach7 Technologies 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 Mach7 Technologies 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 Mach7 Technologies, you can compare the effects of market volatilities on Gold Road and Mach7 Technologies 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Mach7 Technologies.
Diversification Opportunities for Gold Road and Mach7 Technologies
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Mach7 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 Technologies 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of Gold Road i.e., Gold Road and Mach7 Technologies go up and down completely randomly.
Pair Corralation between Gold Road and Mach7 Technologies
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 0.98 times more return on investment than Mach7 Technologies. However, Gold Road Resources is 1.02 times less risky than Mach7 Technologies. It trades about 0.07 of its potential returns per unit of risk. Mach7 Technologies is currently generating about -0.14 per unit of risk. If you would invest 145.00 in Gold Road Resources on August 25, 2024 and sell it today you would earn a total of 46.00 from holding Gold Road Resources or generate 31.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Mach7 Technologies
Performance |
| Timeline |
| Gold Road Resources |
| Mach7 Technologies |
Gold Road and Mach7 Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Mach7 Technologies
The main advantage of trading using opposite Gold Road and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Mach7 Technologies 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
| Mach7 Technologies vs. Accent Resources NL | Mach7 Technologies vs. Hutchison Telecommunications | Mach7 Technologies vs. GO2 People | Mach7 Technologies vs. Pact Group Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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