Correlation Between GoGold Resources and Eskay Mining

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

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

Diversification Opportunities for GoGold Resources and Eskay Mining

0.19

Correlation Coefficient

GoGold Resources  Eskay Mining

Average diversification

The 3 months correlation between GoGold and Eskay is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of GoGold Resources i.e., GoGold Resources and Eskay Mining go up and down completely randomly.

Pair Corralation between GoGold Resources and Eskay Mining

Assuming the 90 days trading horizon GoGold Resources is expected to generate 0.63 times more return on investment than Eskay Mining. However, GoGold Resources is 1.58 times less risky than Eskay Mining. It trades about 0.01 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about -0.02 per unit of risk. If you would invest  141.00  in GoGold Resources on October 22, 2024 and sell it today you would lose (3.00) from holding GoGold Resources or give up 2.13% of portfolio value over 90 days.

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

GoGold Resources  vs.  Eskay Mining Corp

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.

Eskay Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eskay Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eskay Mining 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 GoGold Resources and Eskay Mining

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

The idea behind GoGold Resources and Eskay Mining Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.