Correlation Between Golden Ridge and Sparx Technology

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

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

Diversification Opportunities for Golden Ridge and Sparx Technology

0.0

Correlation Coefficient

Golden Ridge  Sparx Technology

Pay attention - limited upside

The 3 months correlation between Golden and Sparx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ridge Resources and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Golden Ridge 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 Golden Ridge Resources are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Golden Ridge i.e., Golden Ridge and Sparx Technology go up and down completely randomly.

Pair Corralation between Golden Ridge and Sparx Technology

Assuming the 90 days trading horizon Golden Ridge is expected to generate 481.02 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, Golden Ridge Resources is 18.62 times less risky than Sparx Technology. It trades about 0.0 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Sparx Technology on December 4, 2024 and sell it today you would earn a total of  2,372  from holding Sparx Technology or generate 474500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Golden Ridge Resources  vs.  Sparx Technology

Golden Ridge Resources

Risk-Adjusted Performance

Very Weak

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

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Golden Ridge and Sparx Technology

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

The idea behind Golden Ridge Resources and Sparx Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.