Correlation Between Galantas Gold and Red Pine

Can any of the company-specific risk be diversified away by investing in both Galantas Gold and Red Pine 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 Red Pine 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 Red Pine Exploration, you can compare the effects of market volatilities on Galantas Gold and Red Pine 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 Red Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galantas Gold and Red Pine.

Diversification Opportunities for Galantas Gold and Red Pine

-0.2

Correlation Coefficient

Galantas Gold  Red Pine

Good diversification

The 3 months correlation between Galantas and Red is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Galantas Gold Corp and Red Pine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Pine Exploration 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 Red Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Pine Exploration has no effect on the direction of Galantas Gold i.e., Galantas Gold and Red Pine go up and down completely randomly.

Pair Corralation between Galantas Gold and Red Pine

Assuming the 90 days horizon Galantas Gold Corp is expected to under-perform the Red Pine. In addition to that, Galantas Gold is 1.08 times more volatile than Red Pine Exploration. It trades about -0.01 of its total potential returns per unit of risk. Red Pine Exploration is currently generating about 0.03 per unit of volatility. If you would invest  17.00  in Red Pine Exploration on December 2, 2024 and sell it today you would lose (5.00) from holding Red Pine Exploration or give up 29.41% of portfolio value over 90 days.

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

Galantas Gold Corp  vs.  Red Pine Exploration

Galantas Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galantas Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Galantas Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Red Pine Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Pine Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Red Pine is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Galantas Gold and Red Pine

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

The idea behind Galantas Gold Corp and Red Pine Exploration 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.