Correlation Between GoGold Resources and CCL Industries

Can any of the company-specific risk be diversified away by investing in both GoGold Resources and CCL Industries 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 GoGold Resources and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for GoGold Resources and CCL Industries

0.83

Correlation Coefficient

GoGold Resources  CCL Industries

Very poor diversification

The 3 months correlation between GoGold and CCL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and GoGold Resources 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 GoGold Resources are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of GoGold Resources i.e., GoGold Resources and CCL Industries go up and down completely randomly.

Pair Corralation between GoGold Resources and CCL Industries

Assuming the 90 days trading horizon GoGold Resources is expected to generate 2.59 times less return on investment than CCL Industries. In addition to that, GoGold Resources is 2.52 times more volatile than CCL Industries. It trades about 0.01 of its total potential returns per unit of risk. CCL Industries is currently generating about 0.08 per unit of volatility. If you would invest  5,672  in CCL Industries on October 7, 2024 and sell it today you would earn a total of  1,785  from holding CCL Industries or generate 31.47% return on investment over 90 days.

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

GoGold Resources  vs.  CCL Industries

GoGold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoGold Resources 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 fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GoGold Resources and CCL Industries

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

The idea behind GoGold Resources and CCL Industries 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.