Correlation Between Red Pine and GGX Gold
Can any of the company-specific risk be diversified away by investing in both Red Pine and GGX Gold 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 Red Pine and GGX Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and GGX Gold Corp, you can compare the effects of market volatilities on Red Pine and GGX Gold 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 Red Pine with a short position of GGX Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and GGX Gold.
Diversification Opportunities for Red Pine and GGX Gold
Significant diversification
The 3 months correlation between Red and GGX is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and GGX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGX Gold Corp and Red Pine 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 Red Pine Exploration are associated (or correlated) with GGX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGX Gold Corp has no effect on the direction of Red Pine i.e., Red Pine and GGX Gold go up and down completely randomly.
Pair Corralation between Red Pine and GGX Gold
Assuming the 90 days horizon Red Pine is expected to generate 3.75 times less return on investment than GGX Gold. But when comparing it to its historical volatility, Red Pine Exploration is 2.47 times less risky than GGX Gold. It trades about 0.02 of its potential returns per unit of risk. GGX Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.40 in GGX Gold Corp on August 29, 2024 and sell it today you would lose (3.15) from holding GGX Gold Corp or give up 71.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. GGX Gold Corp
Performance |
| Timeline |
| Red Pine Exploration |
| GGX Gold Corp |
Red Pine and GGX Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and GGX Gold
The main advantage of trading using opposite Red Pine and GGX Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, GGX Gold 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 GGX Gold will offset losses from the drop in GGX Gold's long position.| Red Pine vs. Silver Hammer Mining | Red Pine vs. Reyna Silver Corp | Red Pine vs. Guanajuato Silver | Red Pine vs. Silver One Resources |
| GGX Gold vs. GFG Resources | GGX Gold vs. Klondike Gold Corp | GGX Gold vs. Jaguar Mining | GGX Gold vs. Marvel Gold Limited |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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