Correlation Between Angold Resources and GoldMining

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

By analyzing existing cross correlation between Angold Resources and GoldMining, you can compare the effects of market volatilities on Angold Resources and GoldMining 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 Angold Resources with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angold Resources and GoldMining.

Diversification Opportunities for Angold Resources and GoldMining

0.07

Correlation Coefficient

Angold Resources  GoldMining

Significant diversification

The 3 months correlation between Angold and GoldMining is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Angold Resources and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Angold Resources 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 Angold Resources are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Angold Resources i.e., Angold Resources and GoldMining go up and down completely randomly.

Pair Corralation between Angold Resources and GoldMining

Assuming the 90 days horizon Angold Resources is expected to generate 17.61 times more return on investment than GoldMining. However, Angold Resources is 17.61 times more volatile than GoldMining. It trades about 0.12 of its potential returns per unit of risk. GoldMining is currently generating about 0.0 per unit of risk. If you would invest  4.00  in Angold Resources on September 2, 2024 and sell it today you would lose (0.80) from holding Angold Resources or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Angold Resources  vs.  GoldMining

Angold Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Angold Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Angold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Angold Resources and GoldMining

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

The idea behind Angold Resources and GoldMining 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.