Correlation Between Gold Road and ABO GROUP

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

By analyzing existing cross correlation between Gold Road Resources and ABO GROUP ENVIRONMENT, you can compare the effects of market volatilities on Gold Road and ABO GROUP 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 ABO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and ABO GROUP.

Diversification Opportunities for Gold Road and ABO GROUP

-0.66

Correlation Coefficient

Gold Road  ABO GROUP

Excellent diversification

The 3 months correlation between Gold and ABO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and ABO GROUP ENVIRONMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABO GROUP ENVIRONMENT 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 Resources are associated (or correlated) with ABO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABO GROUP ENVIRONMENT has no effect on the direction of Gold Road i.e., Gold Road and ABO GROUP go up and down completely randomly.

Pair Corralation between Gold Road and ABO GROUP

Assuming the 90 days horizon Gold Road Resources is expected to generate 1.55 times more return on investment than ABO GROUP. However, Gold Road is 1.55 times more volatile than ABO GROUP ENVIRONMENT. It trades about 0.16 of its potential returns per unit of risk. ABO GROUP ENVIRONMENT is currently generating about -0.12 per unit of risk. If you would invest  99.00  in Gold Road Resources on September 20, 2024 and sell it today you would earn a total of  25.00  from holding Gold Road Resources or generate 25.25% return on investment over 90 days.

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

Gold Road Resources  vs.  ABO GROUP ENVIRONMENT

Gold Road Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

ABO GROUP ENVIRONMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABO GROUP ENVIRONMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gold Road and ABO GROUP

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

The idea behind Gold Road Resources and ABO GROUP ENVIRONMENT 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.