Correlation Between Sarama Resource and Patagonia Gold
Can any of the company-specific risk be diversified away by investing in both Sarama Resource and Patagonia 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 Sarama Resource and Patagonia Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarama Resource and Patagonia Gold Corp, you can compare the effects of market volatilities on Sarama Resource and Patagonia 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 Sarama Resource with a short position of Patagonia Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarama Resource and Patagonia Gold.
Diversification Opportunities for Sarama Resource and Patagonia Gold
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sarama and Patagonia is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sarama Resource and Patagonia Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patagonia Gold Corp and Sarama Resource 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 Sarama Resource are associated (or correlated) with Patagonia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patagonia Gold Corp has no effect on the direction of Sarama Resource i.e., Sarama Resource and Patagonia Gold go up and down completely randomly.
Pair Corralation between Sarama Resource and Patagonia Gold
Assuming the 90 days horizon Sarama Resource is expected to under-perform the Patagonia Gold. But the stock apears to be less risky and, when comparing its historical volatility, Sarama Resource is 1.75 times less risky than Patagonia Gold. The stock trades about -0.07 of its potential returns per unit of risk. The Patagonia Gold Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Patagonia Gold Corp on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Patagonia Gold Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sarama Resource vs. Patagonia Gold Corp
Performance |
| Timeline |
| Sarama Resource |
| Patagonia Gold Corp |
Sarama Resource and Patagonia Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarama Resource and Patagonia Gold
The main advantage of trading using opposite Sarama Resource and Patagonia Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarama Resource position performs unexpectedly, Patagonia 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 Patagonia Gold will offset losses from the drop in Patagonia Gold's long position.| Sarama Resource vs. Thor Explorations | Sarama Resource vs. Highway 50 Gold | Sarama Resource vs. Transatlantic Mining Corp | Sarama Resource vs. Finlay Minerals |
| Patagonia Gold vs. Rover Metals Corp | Patagonia Gold vs. Southern Empire Resources | Patagonia Gold vs. Sarama Resource | Patagonia Gold vs. Awale Resources |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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