Correlation Between Flinders Resources and Canagold Resources

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

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

Diversification Opportunities for Flinders Resources and Canagold Resources

0.6

Correlation Coefficient

Flinders Resources  Canagold Resources

Poor diversification

The 3 months correlation between Flinders and Canagold is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Canagold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canagold Resources and Flinders 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 Flinders Resources Limited are associated (or correlated) with Canagold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canagold Resources has no effect on the direction of Flinders Resources i.e., Flinders Resources and Canagold Resources go up and down completely randomly.

Pair Corralation between Flinders Resources and Canagold Resources

Assuming the 90 days horizon Flinders Resources is expected to generate 1.33 times less return on investment than Canagold Resources. But when comparing it to its historical volatility, Flinders Resources Limited is 1.26 times less risky than Canagold Resources. It trades about 0.12 of its potential returns per unit of risk. Canagold Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Canagold Resources on December 23, 2024 and sell it today you would earn a total of  10.00  from holding Canagold Resources or generate 35.71% return on investment over 90 days.

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

Flinders Resources Limited  vs.  Canagold Resources

Flinders Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flinders Resources Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Canagold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canagold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Canagold Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flinders Resources and Canagold Resources

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

The idea behind Flinders Resources Limited and Canagold 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.