Correlation Between Arctic Star and Goliath Resources

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

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

Diversification Opportunities for Arctic Star and Goliath Resources

-0.19

Correlation Coefficient

Arctic Star  Goliath Resources

Good diversification

The 3 months correlation between Arctic and Goliath is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Star Exploration and Goliath Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Resources and Arctic Star 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 Arctic Star Exploration are associated (or correlated) with Goliath Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Resources has no effect on the direction of Arctic Star i.e., Arctic Star and Goliath Resources go up and down completely randomly.

Pair Corralation between Arctic Star and Goliath Resources

Assuming the 90 days horizon Arctic Star Exploration is expected to under-perform the Goliath Resources. In addition to that, Arctic Star is 1.37 times more volatile than Goliath Resources Limited. It trades about -0.06 of its total potential returns per unit of risk. Goliath Resources Limited is currently generating about -0.07 per unit of volatility. If you would invest  94.00  in Goliath Resources Limited on August 31, 2024 and sell it today you would lose (15.00) from holding Goliath Resources Limited or give up 15.96% of portfolio value over 90 days.

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

Arctic Star Exploration  vs.  Goliath Resources Limited

Arctic Star Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arctic Star Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Goliath Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goliath Resources Limited 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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Arctic Star and Goliath Resources

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

The idea behind Arctic Star Exploration and Goliath Resources Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.