Correlation Between Golden Lake and American Helium

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

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

Diversification Opportunities for Golden Lake and American Helium

-0.04

Correlation Coefficient

Golden Lake  American Helium

Good diversification

The 3 months correlation between Golden and American is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and American Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Helium and Golden Lake 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 Lake Exploration are associated (or correlated) with American Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Helium has no effect on the direction of Golden Lake i.e., Golden Lake and American Helium go up and down completely randomly.

Pair Corralation between Golden Lake and American Helium

Assuming the 90 days horizon Golden Lake Exploration is expected to under-perform the American Helium. But the otc stock apears to be less risky and, when comparing its historical volatility, Golden Lake Exploration is 14.23 times less risky than American Helium. The otc stock trades about -0.01 of its potential returns per unit of risk. The American Helium is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  16.00  in American Helium on September 3, 2024 and sell it today you would lose (5.00) from holding American Helium or give up 31.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Golden Lake Exploration  vs.  American Helium

Golden Lake Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Lake Exploration 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.

American Helium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Helium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, American Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Lake and American Helium

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

The idea behind Golden Lake Exploration and American Helium 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.