Correlation Between Gold Road and EVS Broadcast

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

Diversification Opportunities for Gold Road and EVS Broadcast

0.44

Correlation Coefficient

Gold Road  EVS Broadcast

Very weak diversification

The 3 months correlation between Gold and EVS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Gold Road i.e., Gold Road and EVS Broadcast go up and down completely randomly.

Pair Corralation between Gold Road and EVS Broadcast

Assuming the 90 days horizon Gold Road is expected to generate 1.53 times less return on investment than EVS Broadcast. In addition to that, Gold Road is 1.34 times more volatile than EVS Broadcast Equipment. It trades about 0.11 of its total potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.23 per unit of volatility. If you would invest  3,075  in EVS Broadcast Equipment on December 25, 2024 and sell it today you would earn a total of  755.00  from holding EVS Broadcast Equipment or generate 24.55% return on investment over 90 days.

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

Gold Road Resources  vs.  EVS Broadcast Equipment

Gold Road Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 8 (%) 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.

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, EVS Broadcast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Road and EVS Broadcast

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

The idea behind Gold Road Resources and EVS Broadcast Equipment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.