Correlation Between Japan Gold and Galiano Gold

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

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

Diversification Opportunities for Japan Gold and Galiano Gold

0.38

Correlation Coefficient

Japan Gold  Galiano Gold

Weak diversification

The 3 months correlation between Japan and Galiano is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Japan Gold Corp and Galiano Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galiano Gold and Japan Gold 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 Japan Gold Corp are associated (or correlated) with Galiano Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galiano Gold has no effect on the direction of Japan Gold i.e., Japan Gold and Galiano Gold go up and down completely randomly.

Pair Corralation between Japan Gold and Galiano Gold

Assuming the 90 days horizon Japan Gold Corp is expected to generate 2.25 times more return on investment than Galiano Gold. However, Japan Gold is 2.25 times more volatile than Galiano Gold. It trades about 0.18 of its potential returns per unit of risk. Galiano Gold is currently generating about 0.03 per unit of risk. If you would invest  4.72  in Japan Gold Corp on December 28, 2024 and sell it today you would earn a total of  4.79  from holding Japan Gold Corp or generate 101.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Japan Gold Corp  vs.  Galiano Gold

Japan Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Gold Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Japan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Galiano Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galiano Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Galiano Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Japan Gold and Galiano Gold

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

The idea behind Japan Gold Corp and Galiano 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.