Correlation Between GoGold Resources and EnviroGold Global

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

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

Diversification Opportunities for GoGold Resources and EnviroGold Global

0.28

Correlation Coefficient

GoGold Resources  EnviroGold Global

Modest diversification

The 3 months correlation between GoGold and EnviroGold is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and EnviroGold Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviroGold Global 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 EnviroGold Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviroGold Global has no effect on the direction of GoGold Resources i.e., GoGold Resources and EnviroGold Global go up and down completely randomly.

Pair Corralation between GoGold Resources and EnviroGold Global

Assuming the 90 days horizon GoGold Resources is expected to generate 3.09 times less return on investment than EnviroGold Global. But when comparing it to its historical volatility, GoGold Resources is 2.02 times less risky than EnviroGold Global. It trades about 0.06 of its potential returns per unit of risk. EnviroGold Global Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.00  in EnviroGold Global Limited on September 5, 2024 and sell it today you would earn a total of  1.11  from holding EnviroGold Global Limited or generate 37.0% return on investment over 90 days.

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

GoGold Resources  vs.  EnviroGold Global Limited

GoGold Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, GoGold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

EnviroGold Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EnviroGold Global Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, EnviroGold Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoGold Resources and EnviroGold Global

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

The idea behind GoGold Resources and EnviroGold Global Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.