Correlation Between GoldMining and Aris Mining

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

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

Diversification Opportunities for GoldMining and Aris Mining

0.8

Correlation Coefficient

GoldMining  Aris Mining

Very poor diversification

The 3 months correlation between GoldMining and Aris is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and GoldMining 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 GoldMining are associated (or correlated) with Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of GoldMining i.e., GoldMining and Aris Mining go up and down completely randomly.

Pair Corralation between GoldMining and Aris Mining

Given the investment horizon of 90 days GoldMining is expected to generate 0.87 times more return on investment than Aris Mining. However, GoldMining is 1.14 times less risky than Aris Mining. It trades about -0.04 of its potential returns per unit of risk. Aris Mining is currently generating about -0.09 per unit of risk. If you would invest  94.00  in GoldMining on September 13, 2024 and sell it today you would lose (6.01) from holding GoldMining or give up 6.39% of portfolio value over 90 days.

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

GoldMining  vs.  Aris Mining

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aris Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aris Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GoldMining and Aris Mining

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

The idea behind GoldMining and Aris Mining 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.