Correlation Between Gold Road and Mystate

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

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

Diversification Opportunities for Gold Road and Mystate

0.7

Correlation Coefficient

Gold Road  Mystate

Poor diversification

The 3 months correlation between Gold and Mystate is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Mystate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mystate and Gold Road 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 Gold Road Resources are associated (or correlated) with Mystate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mystate has no effect on the direction of Gold Road i.e., Gold Road and Mystate go up and down completely randomly.

Pair Corralation between Gold Road and Mystate

Assuming the 90 days trading horizon Gold Road is expected to generate 2.67 times less return on investment than Mystate. In addition to that, Gold Road is 1.96 times more volatile than Mystate. It trades about 0.04 of its total potential returns per unit of risk. Mystate is currently generating about 0.23 per unit of volatility. If you would invest  375.00  in Mystate on September 22, 2024 and sell it today you would earn a total of  50.00  from holding Mystate or generate 13.33% return on investment over 90 days.

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

Gold Road Resources  vs.  Mystate

Gold Road Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold Road unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mystate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gold Road and Mystate

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

The idea behind Gold Road Resources and Mystate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.