Correlation Between Giga Metals and Fremont Gold

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

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

Diversification Opportunities for Giga Metals and Fremont Gold

0.07

Correlation Coefficient

Giga Metals  Fremont Gold

Significant diversification

The 3 months correlation between Giga and Fremont is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Giga Metals Corp and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold and Giga Metals 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 Giga Metals Corp are associated (or correlated) with Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Giga Metals i.e., Giga Metals and Fremont Gold go up and down completely randomly.

Pair Corralation between Giga Metals and Fremont Gold

Assuming the 90 days trading horizon Giga Metals is expected to generate 80.88 times less return on investment than Fremont Gold. But when comparing it to its historical volatility, Giga Metals Corp is 5.19 times less risky than Fremont Gold. It trades about 0.01 of its potential returns per unit of risk. Fremont Gold is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9.50  in Fremont Gold on October 27, 2024 and sell it today you would earn a total of  1.50  from holding Fremont Gold or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

Giga Metals Corp  vs.  Fremont Gold

Giga Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fremont Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Giga Metals and Fremont Gold

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

The idea behind Giga Metals Corp and Fremont Gold 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.