Correlation Between Gold Terra and Sarama Resource
Can any of the company-specific risk be diversified away by investing in both Gold Terra and Sarama Resource 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 Terra and Sarama Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Terra Resource and Sarama Resource, you can compare the effects of market volatilities on Gold Terra and Sarama Resource 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 Terra with a short position of Sarama Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Terra and Sarama Resource.
Diversification Opportunities for Gold Terra and Sarama Resource
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Sarama is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gold Terra Resource and Sarama Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarama Resource and Gold Terra 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 Terra Resource are associated (or correlated) with Sarama Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarama Resource has no effect on the direction of Gold Terra i.e., Gold Terra and Sarama Resource go up and down completely randomly.
Pair Corralation between Gold Terra and Sarama Resource
Assuming the 90 days horizon Gold Terra is expected to generate 2.38 times less return on investment than Sarama Resource. But when comparing it to its historical volatility, Gold Terra Resource is 1.55 times less risky than Sarama Resource. It trades about 0.04 of its potential returns per unit of risk. Sarama Resource is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Sarama Resource on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Sarama Resource or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Terra Resource vs. Sarama Resource
Performance |
| Timeline |
| Gold Terra Resource |
| Sarama Resource |
Gold Terra and Sarama Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Terra and Sarama Resource
The main advantage of trading using opposite Gold Terra and Sarama Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Terra position performs unexpectedly, Sarama Resource 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 Sarama Resource will offset losses from the drop in Sarama Resource's long position.| Gold Terra vs. GR Silver Mining | Gold Terra vs. Maple Gold Mines | Gold Terra vs. Revival Gold | Gold Terra vs. White 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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