Correlation Between GOLD ROAD and CeoTronics

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

Diversification Opportunities for GOLD ROAD and CeoTronics

0.68

Correlation Coefficient

GOLD ROAD  CeoTronics

Poor diversification

The 3 months correlation between GOLD and CeoTronics is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and CeoTronics go up and down completely randomly.

Pair Corralation between GOLD ROAD and CeoTronics

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 0.83 times more return on investment than CeoTronics. However, GOLD ROAD RES is 1.21 times less risky than CeoTronics. It trades about -0.08 of its potential returns per unit of risk. CeoTronics AG is currently generating about -0.3 per unit of risk. If you would invest  130.00  in GOLD ROAD RES on October 11, 2024 and sell it today you would lose (3.00) from holding GOLD ROAD RES or give up 2.31% of portfolio value over 90 days.

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

GOLD ROAD RES  vs.  CeoTronics AG

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.

CeoTronics AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOLD ROAD and CeoTronics

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

The idea behind GOLD ROAD RES and CeoTronics AG 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.