Correlation Between First State and Goldspot Discoveries

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

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

Diversification Opportunities for First State and Goldspot Discoveries

-0.73

Correlation Coefficient

First State  Goldspot Discoveries

Pay attention - limited upside

The 3 months correlation between First and Goldspot is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and Goldspot Discoveries Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldspot Discoveries Corp and First State 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 First State Financial are associated (or correlated) with Goldspot Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldspot Discoveries Corp has no effect on the direction of First State i.e., First State and Goldspot Discoveries go up and down completely randomly.

Pair Corralation between First State and Goldspot Discoveries

If you would invest  15.00  in Goldspot Discoveries Corp on October 5, 2024 and sell it today you would lose (4.00) from holding Goldspot Discoveries Corp or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.37%
Values	Daily Returns

First State Financial  vs.  Goldspot Discoveries Corp

First State Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First State Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First State is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Goldspot Discoveries Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldspot Discoveries Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with First State and Goldspot Discoveries

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

The idea behind First State Financial and Goldspot Discoveries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.