Correlation Between Dacian Gold and Leviathan Gold

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

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

Diversification Opportunities for Dacian Gold and Leviathan Gold

-0.39

Correlation Coefficient

Dacian Gold  Leviathan Gold

Very good diversification

The 3 months correlation between Dacian and Leviathan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dacian Gold Limited and Leviathan Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leviathan Gold and Dacian 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 Dacian Gold Limited are associated (or correlated) with Leviathan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leviathan Gold has no effect on the direction of Dacian Gold i.e., Dacian Gold and Leviathan Gold go up and down completely randomly.

Pair Corralation between Dacian Gold and Leviathan Gold

Assuming the 90 days horizon Dacian Gold Limited is expected to generate 0.29 times more return on investment than Leviathan Gold. However, Dacian Gold Limited is 3.44 times less risky than Leviathan Gold. It trades about 0.06 of its potential returns per unit of risk. Leviathan Gold is currently generating about 0.01 per unit of risk. If you would invest  5.01  in Dacian Gold Limited on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Dacian Gold Limited or generate 19.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.41%
Values	Daily Returns

Dacian Gold Limited  vs.  Leviathan Gold

Dacian Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Leviathan Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leviathan Gold 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 Dacian Gold and Leviathan Gold

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

The idea behind Dacian Gold Limited and Leviathan 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.