Correlation Between Elemental Royalties and Antilles Gold

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

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

Diversification Opportunities for Elemental Royalties and Antilles Gold

0.06

Correlation Coefficient

Elemental Royalties  Antilles Gold

Significant diversification

The 3 months correlation between Elemental and Antilles is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Elemental Royalties Corp and Antilles Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antilles Gold Limited and Elemental Royalties 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 Elemental Royalties Corp are associated (or correlated) with Antilles Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antilles Gold Limited has no effect on the direction of Elemental Royalties i.e., Elemental Royalties and Antilles Gold go up and down completely randomly.

Pair Corralation between Elemental Royalties and Antilles Gold

Assuming the 90 days horizon Elemental Royalties is expected to generate 11.19 times less return on investment than Antilles Gold. But when comparing it to its historical volatility, Elemental Royalties Corp is 13.73 times less risky than Antilles Gold. It trades about 0.13 of its potential returns per unit of risk. Antilles Gold Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Antilles Gold Limited on December 30, 2024 and sell it today you would earn a total of  0.07  from holding Antilles Gold Limited or generate 30.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Elemental Royalties Corp  vs.  Antilles Gold Limited

Elemental Royalties Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elemental Royalties Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Elemental Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Antilles Gold Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antilles Gold Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Antilles Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elemental Royalties and Antilles Gold

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

The idea behind Elemental Royalties Corp and Antilles Gold Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.