Correlation Between Golden Star and Eloro Resources

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

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

Diversification Opportunities for Golden Star and Eloro Resources

-0.41

Correlation Coefficient

Golden Star  Eloro Resources

Very good diversification

The 3 months correlation between Golden and Eloro is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Resource and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources and Golden Star 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 Star Resource are associated (or correlated) with Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Golden Star i.e., Golden Star and Eloro Resources go up and down completely randomly.

Pair Corralation between Golden Star and Eloro Resources

Given the investment horizon of 90 days Golden Star Resource is expected to under-perform the Eloro Resources. In addition to that, Golden Star is 1.11 times more volatile than Eloro Resources. It trades about -0.13 of its total potential returns per unit of risk. Eloro Resources is currently generating about -0.04 per unit of volatility. If you would invest  76.00  in Eloro Resources on November 29, 2024 and sell it today you would lose (10.00) from holding Eloro Resources or give up 13.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Golden Star Resource  vs.  Eloro Resources

Golden Star Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Star Resource 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 basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eloro Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eloro Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Golden Star and Eloro Resources

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

The idea behind Golden Star Resource and Eloro Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.