Correlation Between Golden Goliath and Minera Alamos

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

Diversification Opportunities for Golden Goliath and Minera Alamos

0.59

Correlation Coefficient

Golden Goliath  Minera Alamos

Very weak diversification

The 3 months correlation between Golden and Minera is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Golden Goliath Resources and Minera Alamos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minera Alamos 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 Minera Alamos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minera Alamos has no effect on the direction of Golden Goliath i.e., Golden Goliath and Minera Alamos go up and down completely randomly.

Pair Corralation between Golden Goliath and Minera Alamos

Assuming the 90 days horizon Golden Goliath Resources is expected to under-perform the Minera Alamos. But the stock apears to be less risky and, when comparing its historical volatility, Golden Goliath Resources is 1.09 times less risky than Minera Alamos. The stock trades about -0.22 of its potential returns per unit of risk. The Minera Alamos is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Minera Alamos on September 3, 2024 and sell it today you would lose (6.00) from holding Minera Alamos or give up 16.67% of portfolio value over 90 days.

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

Golden Goliath Resources  vs.  Minera Alamos

Golden Goliath Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 7 (%) 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.

Minera Alamos

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minera Alamos are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Minera Alamos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Goliath and Minera Alamos

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

The idea behind Golden Goliath Resources and Minera Alamos 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.