Correlation Between GoGold Resources and Max Resource

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

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

Diversification Opportunities for GoGold Resources and Max Resource

0.31

Correlation Coefficient

GoGold Resources  Max Resource

Weak diversification

The 3 months correlation between GoGold and Max is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Max Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Resource 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 Max Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Resource Corp has no effect on the direction of GoGold Resources i.e., GoGold Resources and Max Resource go up and down completely randomly.

Pair Corralation between GoGold Resources and Max Resource

Assuming the 90 days horizon GoGold Resources is expected to generate 0.4 times more return on investment than Max Resource. However, GoGold Resources is 2.51 times less risky than Max Resource. It trades about 0.24 of its potential returns per unit of risk. Max Resource Corp is currently generating about 0.07 per unit of risk. If you would invest  78.00  in GoGold Resources on December 25, 2024 and sell it today you would earn a total of  46.00  from holding GoGold Resources or generate 58.97% 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.  Max Resource Corp

GoGold Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 18 (%) 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.

Max Resource Corp

Risk-Adjusted Performance

Modest

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

Pair Trading with GoGold Resources and Max Resource

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

The idea behind GoGold Resources and Max Resource 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.