Correlation Between Golden Pursuit and CANEX Metals

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

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

Diversification Opportunities for Golden Pursuit and CANEX Metals

0.38

Correlation Coefficient

Golden Pursuit  CANEX Metals

Weak diversification

The 3 months correlation between Golden and CANEX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Golden Pursuit Resources and CANEX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANEX Metals and Golden Pursuit 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 Golden Pursuit Resources are associated (or correlated) with CANEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANEX Metals has no effect on the direction of Golden Pursuit i.e., Golden Pursuit and CANEX Metals go up and down completely randomly.

Pair Corralation between Golden Pursuit and CANEX Metals

Assuming the 90 days horizon Golden Pursuit is expected to generate 2.58 times less return on investment than CANEX Metals. But when comparing it to its historical volatility, Golden Pursuit Resources is 1.74 times less risky than CANEX Metals. It trades about 0.02 of its potential returns per unit of risk. CANEX Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.00  in CANEX Metals on September 13, 2024 and sell it today you would lose (3.00) from holding CANEX Metals or give up 42.86% of portfolio value over 90 days.

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

Golden Pursuit Resources  vs.  CANEX Metals

Golden Pursuit Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

CANEX Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CANEX Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CANEX Metals 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 Golden Pursuit and CANEX Metals

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

The idea behind Golden Pursuit Resources and CANEX Metals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.