Correlation Between Golden Star and Niagara Mohawk

Can any of the company-specific risk be diversified away by investing in both Golden Star and Niagara Mohawk 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 Niagara Mohawk 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 Niagara Mohawk Power, you can compare the effects of market volatilities on Golden Star and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and Niagara Mohawk.

Diversification Opportunities for Golden Star and Niagara Mohawk

-0.06

Correlation Coefficient

Golden Star  Niagara Mohawk

Good diversification

The 3 months correlation between Golden and Niagara is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Resource and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Golden Star i.e., Golden Star and Niagara Mohawk go up and down completely randomly.

Pair Corralation between Golden Star and Niagara Mohawk

Given the investment horizon of 90 days Golden Star Resource is expected to under-perform the Niagara Mohawk. In addition to that, Golden Star is 3.7 times more volatile than Niagara Mohawk Power. It trades about -0.13 of its total potential returns per unit of risk. Niagara Mohawk Power is currently generating about -0.14 per unit of volatility. If you would invest  6,200  in Niagara Mohawk Power on December 1, 2024 and sell it today you would lose (499.00) from holding Niagara Mohawk Power or give up 8.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Golden Star Resource  vs.  Niagara Mohawk Power

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Niagara Mohawk Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Niagara Mohawk Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Golden Star and Niagara Mohawk

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

The idea behind Golden Star Resource and Niagara Mohawk Power 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.