Correlation Between Collective Mining and Fremont Gold

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

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

Diversification Opportunities for Collective Mining and Fremont Gold

0.43

Correlation Coefficient

Collective Mining  Fremont Gold

Very weak diversification

The 3 months correlation between Collective and Fremont is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Collective Mining and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold and Collective Mining 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 Collective Mining are associated (or correlated) with Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Collective Mining i.e., Collective Mining and Fremont Gold go up and down completely randomly.

Pair Corralation between Collective Mining and Fremont Gold

Assuming the 90 days horizon Collective Mining is expected to under-perform the Fremont Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Collective Mining is 3.08 times less risky than Fremont Gold. The otc stock trades about -0.01 of its potential returns per unit of risk. The Fremont Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Fremont Gold on September 1, 2024 and sell it today you would lose (3.05) from holding Fremont Gold or give up 27.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.25%
Values	Daily Returns

Collective Mining  vs.  Fremont Gold

Collective Mining

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Collective Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile primary indicators, Collective Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Fremont Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fremont Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fremont Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collective Mining and Fremont Gold

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

The idea behind Collective Mining and Fremont 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.