Correlation Between H FARM and GOLD ROAD

Can any of the company-specific risk be diversified away by investing in both H FARM and GOLD ROAD 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 H FARM and GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H FARM SPA and GOLD ROAD RES, you can compare the effects of market volatilities on H FARM and GOLD ROAD 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 H FARM with a short position of GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and GOLD ROAD.

Diversification Opportunities for H FARM and GOLD ROAD

-0.58

Correlation Coefficient

H FARM  GOLD ROAD

Excellent diversification

The 3 months correlation between 5JQ and GOLD is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and H FARM 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 H FARM SPA are associated (or correlated) with GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of H FARM i.e., H FARM and GOLD ROAD go up and down completely randomly.

Pair Corralation between H FARM and GOLD ROAD

Assuming the 90 days horizon H FARM SPA is expected to under-perform the GOLD ROAD. In addition to that, H FARM is 1.79 times more volatile than GOLD ROAD RES. It trades about -0.01 of its total potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.17 per unit of volatility. If you would invest  98.00  in GOLD ROAD RES on September 15, 2024 and sell it today you would earn a total of  28.00  from holding GOLD ROAD RES or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

H FARM SPA  vs.  GOLD ROAD RES

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H FARM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GOLD ROAD RES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H FARM and GOLD ROAD

The main advantage of trading using opposite H FARM and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.

The idea behind H FARM SPA and GOLD ROAD RES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.