Correlation Between Fremont Gold and Tower Resources

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

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

Diversification Opportunities for Fremont Gold and Tower Resources

-0.01

Correlation Coefficient

Fremont Gold  Tower Resources

Good diversification

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

Pair Corralation between Fremont Gold and Tower Resources

Assuming the 90 days horizon Fremont Gold is expected to generate 2.38 times less return on investment than Tower Resources. In addition to that, Fremont Gold is 1.53 times more volatile than Tower Resources. It trades about 0.03 of its total potential returns per unit of risk. Tower Resources is currently generating about 0.09 per unit of volatility. If you would invest  9.00  in Tower Resources on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Tower Resources or generate 55.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Fremont Gold  vs.  Tower Resources

Fremont Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Fremont Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tower Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tower Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fremont Gold and Tower Resources

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

The idea behind Fremont Gold and Tower 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.