Correlation Between Eskay Mining and Goliath Resources

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

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

Diversification Opportunities for Eskay Mining and Goliath Resources

0.31

Correlation Coefficient

Eskay Mining  Goliath Resources

Weak diversification

The 3 months correlation between Eskay and Goliath is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Resources and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Goliath Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Resources has no effect on the direction of Eskay Mining i.e., Eskay Mining and Goliath Resources go up and down completely randomly.

Pair Corralation between Eskay Mining and Goliath Resources

Assuming the 90 days horizon Eskay Mining is expected to generate 1.35 times less return on investment than Goliath Resources. But when comparing it to its historical volatility, Eskay Mining Corp is 1.6 times less risky than Goliath Resources. It trades about 0.17 of its potential returns per unit of risk. Goliath Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Goliath Resources on December 29, 2024 and sell it today you would earn a total of  66.00  from holding Goliath Resources or generate 65.35% return on investment over 90 days.

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

Eskay Mining Corp  vs.  Goliath Resources

Eskay Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eskay Mining Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eskay Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Goliath Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goliath Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goliath Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eskay Mining and Goliath Resources

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

The idea behind Eskay Mining Corp and Goliath Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.