Correlation Between Freegold Ventures and American Creek

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

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

Diversification Opportunities for Freegold Ventures and American Creek

-0.16

Correlation Coefficient

Freegold Ventures  American Creek

Good diversification

The 3 months correlation between Freegold and American is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Freegold Ventures Limited and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources and Freegold Ventures 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 Freegold Ventures Limited are associated (or correlated) with American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of Freegold Ventures i.e., Freegold Ventures and American Creek go up and down completely randomly.

Pair Corralation between Freegold Ventures and American Creek

Assuming the 90 days trading horizon Freegold Ventures Limited is expected to under-perform the American Creek. But the stock apears to be less risky and, when comparing its historical volatility, Freegold Ventures Limited is 2.89 times less risky than American Creek. The stock trades about -0.06 of its potential returns per unit of risk. The American Creek Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  17.00  in American Creek Resources on September 3, 2024 and sell it today you would earn a total of  13.00  from holding American Creek Resources or generate 76.47% return on investment over 90 days.

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

Freegold Ventures Limited  vs.  American Creek Resources

Freegold Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freegold Ventures Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Creek Resources

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Freegold Ventures and American Creek

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

The idea behind Freegold Ventures Limited and American Creek 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.