Correlation Between Galantas Gold and Golden Pursuit

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

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

Diversification Opportunities for Galantas Gold and Golden Pursuit

0.27

Correlation Coefficient

Galantas Gold  Golden Pursuit

Modest diversification

The 3 months correlation between Galantas and Golden is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Galantas Gold Corp and Golden Pursuit Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Pursuit Resources and Galantas 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 Galantas Gold Corp are associated (or correlated) with Golden Pursuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Pursuit Resources has no effect on the direction of Galantas Gold i.e., Galantas Gold and Golden Pursuit go up and down completely randomly.

Pair Corralation between Galantas Gold and Golden Pursuit

Assuming the 90 days horizon Galantas Gold Corp is expected to generate 2.78 times more return on investment than Golden Pursuit. However, Galantas Gold is 2.78 times more volatile than Golden Pursuit Resources. It trades about 0.11 of its potential returns per unit of risk. Golden Pursuit Resources is currently generating about 0.04 per unit of risk. If you would invest  5.00  in Galantas Gold Corp on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Galantas Gold Corp or generate 60.0% return on investment over 90 days.

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

Galantas Gold Corp  vs.  Golden Pursuit Resources

Galantas Gold Corp

Risk-Adjusted Performance

OK

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

Golden Pursuit Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Pursuit Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Golden Pursuit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Galantas Gold and Golden Pursuit

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

The idea behind Galantas Gold Corp and Golden Pursuit 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.