Correlation Between Centerra Gold and Seabridge Gold

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

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

Diversification Opportunities for Centerra Gold and Seabridge Gold

0.86

Correlation Coefficient

Centerra Gold  Seabridge Gold

Very poor diversification

The 3 months correlation between Centerra and Seabridge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold and Centerra 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 Centerra Gold are associated (or correlated) with Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Centerra Gold i.e., Centerra Gold and Seabridge Gold go up and down completely randomly.

Pair Corralation between Centerra Gold and Seabridge Gold

Assuming the 90 days horizon Centerra Gold is expected to generate 0.85 times more return on investment than Seabridge Gold. However, Centerra Gold is 1.17 times less risky than Seabridge Gold. It trades about -0.03 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.04 per unit of risk. If you would invest  897.00  in Centerra Gold on September 3, 2024 and sell it today you would lose (52.00) from holding Centerra Gold or give up 5.8% of portfolio value over 90 days.

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

Centerra Gold  vs.  Seabridge Gold

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Centerra Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Centerra Gold and Seabridge Gold

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

The idea behind Centerra Gold and Seabridge 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.