Correlation Between Cartier Resources and Tristar Gold

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

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

Diversification Opportunities for Cartier Resources and Tristar Gold

-0.7

Correlation Coefficient

Cartier Resources  Tristar Gold

Excellent diversification

The 3 months correlation between Cartier and Tristar is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cartier Resources and Tristar Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tristar Gold and Cartier Resources 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 Cartier Resources are associated (or correlated) with Tristar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tristar Gold has no effect on the direction of Cartier Resources i.e., Cartier Resources and Tristar Gold go up and down completely randomly.

Pair Corralation between Cartier Resources and Tristar Gold

Assuming the 90 days horizon Cartier Resources is expected to generate 1.08 times more return on investment than Tristar Gold. However, Cartier Resources is 1.08 times more volatile than Tristar Gold. It trades about 0.09 of its potential returns per unit of risk. Tristar Gold is currently generating about -0.09 per unit of risk. If you would invest  6.00  in Cartier Resources on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Cartier Resources or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Cartier Resources  vs.  Tristar Gold

Cartier Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cartier Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Tristar Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tristar Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cartier Resources and Tristar Gold

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

The idea behind Cartier Resources and Tristar Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.