Correlation Between Golden Developing and Rimrock Gold

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

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

Diversification Opportunities for Golden Developing and Rimrock Gold

0.34

Correlation Coefficient

Golden Developing  Rimrock Gold

Weak diversification

The 3 months correlation between Golden and Rimrock is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Golden Developing Solutions and Rimrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimrock Gold Corp and Golden Developing 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 Golden Developing Solutions are associated (or correlated) with Rimrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimrock Gold Corp has no effect on the direction of Golden Developing i.e., Golden Developing and Rimrock Gold go up and down completely randomly.

Pair Corralation between Golden Developing and Rimrock Gold

Given the investment horizon of 90 days Golden Developing Solutions is expected to generate 9.74 times more return on investment than Rimrock Gold. However, Golden Developing is 9.74 times more volatile than Rimrock Gold Corp. It trades about 0.13 of its potential returns per unit of risk. Rimrock Gold Corp is currently generating about 0.06 per unit of risk. If you would invest  0.00  in Golden Developing Solutions on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Golden Developing Solutions or generate 9.223372036854776E16% return on investment over 90 days.

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

Golden Developing Solutions  vs.  Rimrock Gold Corp

Golden Developing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Developing Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Golden Developing reported solid returns over the last few months and may actually be approaching a breakup point.

Rimrock Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Developing and Rimrock Gold

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

The idea behind Golden Developing Solutions and Rimrock 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.