Correlation Between Austin Gold and Paramount Gold

Can any of the company-specific risk be diversified away by investing in both Austin 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 Austin 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 Austin Gold Corp and Paramount Gold Nevada, you can compare the effects of market volatilities on Austin 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 Austin Gold with a short position of Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Gold and Paramount Gold.

Diversification Opportunities for Austin Gold and Paramount Gold

-0.53

Correlation Coefficient

Austin Gold  Paramount Gold

Excellent diversification

The 3 months correlation between Austin and Paramount is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Austin Gold Corp 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 Austin 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 Austin Gold Corp 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 Austin Gold i.e., Austin Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Austin Gold and Paramount Gold

Given the investment horizon of 90 days Austin Gold Corp is expected to under-perform the Paramount Gold. In addition to that, Austin Gold is 1.69 times more volatile than Paramount Gold Nevada. It trades about -0.19 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  42.00  in Paramount Gold Nevada on August 30, 2024 and sell it today you would lose (2.00) from holding Paramount Gold Nevada or give up 4.76% of portfolio value over 90 days.

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

Austin Gold Corp  vs.  Paramount Gold Nevada

Austin Gold Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Austin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paramount Gold Nevada

Risk-Adjusted Performance

0 of 100

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 Austin Gold and Paramount Gold

The main advantage of trading using opposite Austin Gold and Paramount Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austin 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 Austin Gold Corp 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.