Correlation Between Caldas Gold and Chesapeake Gold

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

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

Diversification Opportunities for Caldas Gold and Chesapeake Gold

0.0

Correlation Coefficient

Caldas Gold  Chesapeake Gold

Pay attention - limited upside

The 3 months correlation between Caldas and Chesapeake is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caldas Gold and Chesapeake Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Gold Corp and Caldas 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 Caldas Gold are associated (or correlated) with Chesapeake Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Gold Corp has no effect on the direction of Caldas Gold i.e., Caldas Gold and Chesapeake Gold go up and down completely randomly.

Pair Corralation between Caldas Gold and Chesapeake Gold

Assuming the 90 days horizon Caldas Gold is expected to generate 54.31 times more return on investment than Chesapeake Gold. However, Caldas Gold is 54.31 times more volatile than Chesapeake Gold Corp. It trades about 0.25 of its potential returns per unit of risk. Chesapeake Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  25.00  in Caldas Gold on October 23, 2024 and sell it today you would lose (7.00) from holding Caldas Gold or give up 28.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.86%
Values	Daily Returns

Caldas Gold  vs.  Chesapeake Gold Corp

Caldas Gold

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Caldas Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Caldas Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Chesapeake Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Gold Corp 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Caldas Gold and Chesapeake Gold

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

The idea behind Caldas Gold and Chesapeake Gold Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.