Correlation Between GoGold Resources and Chemtrade Logistics

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

By analyzing existing cross correlation between GoGold Resources and Chemtrade Logistics Income, you can compare the effects of market volatilities on GoGold Resources and Chemtrade Logistics 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 Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoGold Resources and Chemtrade Logistics.

Diversification Opportunities for GoGold Resources and Chemtrade Logistics

-0.18

Correlation Coefficient

GoGold Resources  Chemtrade Logistics

Good diversification

The 3 months correlation between GoGold and Chemtrade is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics 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 Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of GoGold Resources i.e., GoGold Resources and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between GoGold Resources and Chemtrade Logistics

Assuming the 90 days trading horizon GoGold Resources is expected to generate 2.16 times less return on investment than Chemtrade Logistics. In addition to that, GoGold Resources is 2.76 times more volatile than Chemtrade Logistics Income. It trades about 0.01 of its total potential returns per unit of risk. Chemtrade Logistics Income is currently generating about 0.08 per unit of volatility. If you would invest  921.00  in Chemtrade Logistics Income on October 22, 2024 and sell it today you would earn a total of  117.00  from holding Chemtrade Logistics Income or generate 12.7% return on investment over 90 days.

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

GoGold Resources  vs.  Chemtrade Logistics Income

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.

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GoGold Resources and Chemtrade Logistics

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

The idea behind GoGold Resources and Chemtrade Logistics Income 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.