Correlation Between Eldorado Gold and Sabre Corpo

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

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

Diversification Opportunities for Eldorado Gold and Sabre Corpo

-0.56

Correlation Coefficient

Eldorado Gold  Sabre Corpo

Excellent diversification

The 3 months correlation between Eldorado and Sabre is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo and Eldorado Gold 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 Eldorado Gold Corp are associated (or correlated) with Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Sabre Corpo go up and down completely randomly.

Pair Corralation between Eldorado Gold and Sabre Corpo

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.73 times more return on investment than Sabre Corpo. However, Eldorado Gold Corp is 1.38 times less risky than Sabre Corpo. It trades about 0.09 of its potential returns per unit of risk. Sabre Corpo is currently generating about -0.01 per unit of risk. If you would invest  1,470  in Eldorado Gold Corp on December 28, 2024 and sell it today you would earn a total of  207.00  from holding Eldorado Gold Corp or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eldorado Gold Corp  vs.  Sabre Corpo

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Sabre Corpo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabre Corpo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Sabre Corpo is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eldorado Gold and Sabre Corpo

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

The idea behind Eldorado Gold Corp and Sabre Corpo 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.