Correlation Between GOLD ROAD and SIDETRADE

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

By analyzing existing cross correlation between GOLD ROAD RES and SIDETRADE EO 1, you can compare the effects of market volatilities on GOLD ROAD and SIDETRADE 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 GOLD ROAD with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and SIDETRADE.

Diversification Opportunities for GOLD ROAD and SIDETRADE

-0.23

Correlation Coefficient

GOLD ROAD  SIDETRADE

Very good diversification

The 3 months correlation between GOLD and SIDETRADE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and SIDETRADE go up and down completely randomly.

Pair Corralation between GOLD ROAD and SIDETRADE

Assuming the 90 days trading horizon GOLD ROAD RES is expected to under-perform the SIDETRADE. In addition to that, GOLD ROAD is 1.14 times more volatile than SIDETRADE EO 1. It trades about -0.11 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.03 per unit of volatility. If you would invest  21,700  in SIDETRADE EO 1 on October 11, 2024 and sell it today you would earn a total of  100.00  from holding SIDETRADE EO 1 or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

GOLD ROAD RES  vs.  SIDETRADE EO 1

GOLD ROAD RES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

SIDETRADE EO 1

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOLD ROAD and SIDETRADE

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

The idea behind GOLD ROAD RES and SIDETRADE EO 1 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.

Check out your portfolio center.

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.