Correlation Between Angus Gold and Paramount Gold

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

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

Diversification Opportunities for Angus Gold and Paramount Gold

-0.49

Correlation Coefficient

Angus Gold  Paramount Gold

Very good diversification

The 3 months correlation between Angus and Paramount is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Angus Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada and Angus 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 Angus Gold are associated (or correlated) with Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Angus Gold i.e., Angus Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Angus Gold and Paramount Gold

Assuming the 90 days horizon Angus Gold is expected to generate 2.13 times less return on investment than Paramount Gold. In addition to that, Angus Gold is 1.74 times more volatile than Paramount Gold Nevada. It trades about 0.01 of its total potential returns per unit of risk. Paramount Gold Nevada is currently generating about 0.02 per unit of volatility. If you would invest  33.00  in Paramount Gold Nevada on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Paramount Gold Nevada or generate 9.09% return on investment over 90 days.

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

Angus Gold  vs.  Paramount Gold Nevada

Angus Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Angus Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Angus Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Paramount Gold Nevada

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Angus Gold and Paramount Gold

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

The idea behind Angus Gold and Paramount Gold Nevada 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.