Correlation Between Dacian Gold and Magna Gold

Can any of the company-specific risk be diversified away by investing in both Dacian Gold and Magna 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 Magna 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 Magna Gold Corp, you can compare the effects of market volatilities on Dacian Gold and Magna 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 Magna Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dacian Gold and Magna Gold.

Diversification Opportunities for Dacian Gold and Magna Gold

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Correlation Coefficient

Dacian Gold  Magna Gold

Pay attention - limited upside

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

Pair Corralation between Dacian Gold and Magna Gold

Assuming the 90 days horizon Dacian Gold is expected to generate 1.44 times less return on investment than Magna Gold. But when comparing it to its historical volatility, Dacian Gold Limited is 4.8 times less risky than Magna Gold. It trades about 0.06 of its potential returns per unit of risk. Magna Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Magna Gold Corp on October 4, 2024 and sell it today you would lose (1.40) from holding Magna Gold Corp or give up 63.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.24%
Values	Daily Returns

Dacian Gold Limited  vs.  Magna Gold Corp

Dacian Gold Limited

Risk-Adjusted Performance

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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.

Magna Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dacian Gold and Magna Gold

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

The idea behind Dacian Gold Limited and Magna 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.