Correlation Between Goliath Resources and Kestrel Gold

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

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

Diversification Opportunities for Goliath Resources and Kestrel Gold

0.3

Correlation Coefficient

Goliath Resources  Kestrel Gold

Weak diversification

The 3 months correlation between Goliath and Kestrel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Goliath Resources and Kestrel Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kestrel Gold and Goliath Resources 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 Goliath Resources are associated (or correlated) with Kestrel Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kestrel Gold has no effect on the direction of Goliath Resources i.e., Goliath Resources and Kestrel Gold go up and down completely randomly.

Pair Corralation between Goliath Resources and Kestrel Gold

Assuming the 90 days horizon Goliath Resources is expected to generate 0.51 times more return on investment than Kestrel Gold. However, Goliath Resources is 1.98 times less risky than Kestrel Gold. It trades about 0.06 of its potential returns per unit of risk. Kestrel Gold is currently generating about 0.02 per unit of risk. If you would invest  128.00  in Goliath Resources on October 23, 2024 and sell it today you would earn a total of  13.00  from holding Goliath Resources or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Goliath Resources  vs.  Kestrel Gold

Goliath Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goliath Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goliath Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Kestrel Gold

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with Goliath Resources and Kestrel Gold

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

The idea behind Goliath Resources and Kestrel Gold 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.