Correlation Between Ivanhoe Energy and SolGold PLC

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

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

Diversification Opportunities for Ivanhoe Energy and SolGold PLC

0.32

Correlation Coefficient

Ivanhoe Energy  SolGold PLC

Weak diversification

The 3 months correlation between Ivanhoe and SolGold is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and SolGold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolGold PLC and Ivanhoe Energy 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 Ivanhoe Energy are associated (or correlated) with SolGold PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolGold PLC has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and SolGold PLC go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and SolGold PLC

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the SolGold PLC. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.04 times less risky than SolGold PLC. The stock trades about -0.06 of its potential returns per unit of risk. The SolGold PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13.00  in SolGold PLC on December 30, 2024 and sell it today you would earn a total of  1.00  from holding SolGold PLC or generate 7.69% return on investment over 90 days.

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

Ivanhoe Energy  vs.  SolGold PLC

Ivanhoe Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SolGold PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SolGold PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, SolGold PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ivanhoe Energy and SolGold PLC

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

The idea behind Ivanhoe Energy and SolGold PLC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.