Correlation Between Troilus Gold and Boss Resources

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

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

Diversification Opportunities for Troilus Gold and Boss Resources

0.24

Correlation Coefficient

Troilus Gold  Boss Resources

Modest diversification

The 3 months correlation between Troilus and Boss is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Troilus Gold Corp and Boss Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Resources and Troilus 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 Troilus Gold Corp are associated (or correlated) with Boss Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Resources has no effect on the direction of Troilus Gold i.e., Troilus Gold and Boss Resources go up and down completely randomly.

Pair Corralation between Troilus Gold and Boss Resources

Assuming the 90 days horizon Troilus Gold Corp is expected to generate 1.21 times more return on investment than Boss Resources. However, Troilus Gold is 1.21 times more volatile than Boss Resources. It trades about 0.15 of its potential returns per unit of risk. Boss Resources is currently generating about 0.05 per unit of risk. If you would invest  20.00  in Troilus Gold Corp on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Troilus Gold Corp or generate 50.0% return on investment over 90 days.

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

Troilus Gold Corp  vs.  Boss Resources

Troilus Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Troilus Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Troilus Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Boss Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boss Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boss Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Troilus Gold and Boss Resources

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

The idea behind Troilus Gold Corp and Boss Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.