Correlation Between Clime Investment and Gold Road

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

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

Diversification Opportunities for Clime Investment and Gold Road

0.63

Correlation Coefficient

Clime Investment  Gold Road

Poor diversification

The 3 months correlation between Clime and Gold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Clime Investment 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 Clime Investment Management are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Clime Investment i.e., Clime Investment and Gold Road go up and down completely randomly.

Pair Corralation between Clime Investment and Gold Road

Assuming the 90 days trading horizon Clime Investment Management is expected to under-perform the Gold Road. In addition to that, Clime Investment is 1.16 times more volatile than Gold Road Resources. It trades about -0.03 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.17 per unit of volatility. If you would invest  205.00  in Gold Road Resources on December 21, 2024 and sell it today you would earn a total of  41.00  from holding Gold Road Resources or generate 20.0% return on investment over 90 days.

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

Clime Investment Management  vs.  Gold Road Resources

Clime Investment Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clime Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Clime Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gold Road Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold Road unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clime Investment and Gold Road

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

The idea behind Clime Investment Management and Gold Road 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.