Correlation Between Gold Reserve and Puma Exploration

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

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

Diversification Opportunities for Gold Reserve and Puma Exploration

-0.37

Correlation Coefficient

Gold Reserve  Puma Exploration

Very good diversification

The 3 months correlation between Gold and Puma is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Puma Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Exploration and Gold Reserve 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 Gold Reserve are associated (or correlated) with Puma Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma Exploration has no effect on the direction of Gold Reserve i.e., Gold Reserve and Puma Exploration go up and down completely randomly.

Pair Corralation between Gold Reserve and Puma Exploration

Assuming the 90 days horizon Gold Reserve is expected to under-perform the Puma Exploration. But the otc stock apears to be less risky and, when comparing its historical volatility, Gold Reserve is 1.47 times less risky than Puma Exploration. The otc stock trades about -0.01 of its potential returns per unit of risk. The Puma Exploration is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Puma Exploration on October 3, 2024 and sell it today you would lose (5.00) from holding Puma Exploration or give up 50.0% of portfolio value over 90 days.

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

Gold Reserve  vs.  Puma Exploration

Gold Reserve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Reserve 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 basic 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.

Puma Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Puma Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Reserve and Puma Exploration

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

The idea behind Gold Reserve and Puma 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.