Correlation Between Golden Lake and Altiplano Metals

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

Diversification Opportunities for Golden Lake and Altiplano Metals

0.22

Correlation Coefficient

Golden Lake  Altiplano Metals

Modest diversification

The 3 months correlation between Golden and Altiplano is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and Altiplano Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altiplano Metals 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 Altiplano Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altiplano Metals has no effect on the direction of Golden Lake i.e., Golden Lake and Altiplano Metals go up and down completely randomly.

Pair Corralation between Golden Lake and Altiplano Metals

Assuming the 90 days horizon Golden Lake is expected to generate 1.02 times less return on investment than Altiplano Metals. In addition to that, Golden Lake is 1.08 times more volatile than Altiplano Metals. It trades about 0.06 of its total potential returns per unit of risk. Altiplano Metals is currently generating about 0.07 per unit of volatility. If you would invest  3.50  in Altiplano Metals on December 30, 2024 and sell it today you would earn a total of  0.60  from holding Altiplano Metals or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Golden Lake Exploration  vs.  Altiplano Metals

Golden Lake Exploration

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Lake Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Golden Lake reported solid returns over the last few months and may actually be approaching a breakup point.

Altiplano Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altiplano Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altiplano Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Lake and Altiplano Metals

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

The idea behind Golden Lake Exploration and Altiplano Metals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.