Correlation Between Advance Gold and Spanish Mountain

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

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

Diversification Opportunities for Advance Gold and Spanish Mountain

0.0

Correlation Coefficient

Advance Gold  Spanish Mountain

Pay attention - limited upside

The 3 months correlation between Advance and Spanish is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advance Gold Corp and Spanish Mountain Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spanish Mountain Gold and Advance Gold 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 Advance Gold Corp are associated (or correlated) with Spanish Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spanish Mountain Gold has no effect on the direction of Advance Gold i.e., Advance Gold and Spanish Mountain go up and down completely randomly.

Pair Corralation between Advance Gold and Spanish Mountain

Assuming the 90 days horizon Advance Gold Corp is expected to generate 10.75 times more return on investment than Spanish Mountain. However, Advance Gold is 10.75 times more volatile than Spanish Mountain Gold. It trades about 0.14 of its potential returns per unit of risk. Spanish Mountain Gold is currently generating about 0.09 per unit of risk. If you would invest  0.69  in Advance Gold Corp on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Advance Gold Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Advance Gold Corp  vs.  Spanish Mountain Gold

Advance Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advance Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Advance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Spanish Mountain Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spanish Mountain Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Advance Gold and Spanish Mountain

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

The idea behind Advance Gold Corp and Spanish Mountain Gold 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.