Correlation Between Heliostar Metals and Torex Gold

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

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

Diversification Opportunities for Heliostar Metals and Torex Gold

0.89

Correlation Coefficient

Heliostar Metals  Torex Gold

Very poor diversification

The 3 months correlation between Heliostar and Torex is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Heliostar Metals and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources and Heliostar Metals 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 Heliostar Metals are associated (or correlated) with Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Heliostar Metals i.e., Heliostar Metals and Torex Gold go up and down completely randomly.

Pair Corralation between Heliostar Metals and Torex Gold

Assuming the 90 days horizon Heliostar Metals is expected to generate 1.83 times more return on investment than Torex Gold. However, Heliostar Metals is 1.83 times more volatile than Torex Gold Resources. It trades about 0.07 of its potential returns per unit of risk. Torex Gold Resources is currently generating about 0.05 per unit of risk. If you would invest  18.00  in Heliostar Metals on December 4, 2024 and sell it today you would earn a total of  35.00  from holding Heliostar Metals or generate 194.44% return on investment over 90 days.

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

Heliostar Metals  vs.  Torex Gold Resources

Heliostar Metals

Risk-Adjusted Performance

Modest

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

Torex Gold Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torex Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Torex Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heliostar Metals and Torex Gold

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

The idea behind Heliostar Metals and Torex Gold Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.