Correlation Between Altamira Gold and Falcon Gold

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

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

Diversification Opportunities for Altamira Gold and Falcon Gold

0.01

Correlation Coefficient

Altamira Gold  Falcon Gold

Significant diversification

The 3 months correlation between Altamira and Falcon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altamira Gold Corp and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp and Altamira 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 Altamira Gold Corp are associated (or correlated) with Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Altamira Gold i.e., Altamira Gold and Falcon Gold go up and down completely randomly.

Pair Corralation between Altamira Gold and Falcon Gold

Assuming the 90 days horizon Altamira Gold is expected to generate 1.56 times less return on investment than Falcon Gold. But when comparing it to its historical volatility, Altamira Gold Corp is 1.87 times less risky than Falcon Gold. It trades about 0.07 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Falcon Gold Corp on September 3, 2024 and sell it today you would earn a total of  0.08  from holding Falcon Gold Corp or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Altamira Gold Corp  vs.  Falcon Gold Corp

Altamira Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altamira Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altamira Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Falcon Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Falcon Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altamira Gold and Falcon Gold

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

The idea behind Altamira Gold Corp and Falcon Gold Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.