Correlation Between Golden Goliath and Baroyeca Gold

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

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

Diversification Opportunities for Golden Goliath and Baroyeca Gold

0.19

Correlation Coefficient

Golden Goliath  Baroyeca Gold

Average diversification

The 3 months correlation between Golden and Baroyeca is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Golden Goliath Resources and Baroyeca Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baroyeca Gold Silver and Golden Goliath 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 Goliath Resources are associated (or correlated) with Baroyeca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baroyeca Gold Silver has no effect on the direction of Golden Goliath i.e., Golden Goliath and Baroyeca Gold go up and down completely randomly.

Pair Corralation between Golden Goliath and Baroyeca Gold

Assuming the 90 days horizon Golden Goliath is expected to generate 2.16 times less return on investment than Baroyeca Gold. But when comparing it to its historical volatility, Golden Goliath Resources is 1.2 times less risky than Baroyeca Gold. It trades about 0.03 of its potential returns per unit of risk. Baroyeca Gold Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Baroyeca Gold Silver on October 7, 2024 and sell it today you would lose (4.00) from holding Baroyeca Gold Silver or give up 66.67% of portfolio value over 90 days.

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

Golden Goliath Resources  vs.  Baroyeca Gold Silver

Golden Goliath Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Golden Goliath showed solid returns over the last few months and may actually be approaching a breakup point.

Baroyeca Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baroyeca Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Golden Goliath and Baroyeca Gold

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

The idea behind Golden Goliath Resources and Baroyeca Gold Silver 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.