Correlation Between Liberty Gold and Mandalay Resources

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

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

Diversification Opportunities for Liberty Gold and Mandalay Resources

0.49

Correlation Coefficient

Liberty Gold  Mandalay Resources

Very weak diversification

The 3 months correlation between Liberty and Mandalay is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Mandalay Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mandalay Resources Corp and Liberty 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 Liberty Gold Corp are associated (or correlated) with Mandalay Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mandalay Resources Corp has no effect on the direction of Liberty Gold i.e., Liberty Gold and Mandalay Resources go up and down completely randomly.

Pair Corralation between Liberty Gold and Mandalay Resources

Assuming the 90 days horizon Liberty Gold Corp is expected to generate 1.42 times more return on investment than Mandalay Resources. However, Liberty Gold is 1.42 times more volatile than Mandalay Resources Corp. It trades about 0.06 of its potential returns per unit of risk. Mandalay Resources Corp is currently generating about 0.06 per unit of risk. If you would invest  20.00  in Liberty Gold Corp on December 4, 2024 and sell it today you would earn a total of  2.00  from holding Liberty Gold Corp or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Liberty Gold Corp  vs.  Mandalay Resources Corp

Liberty Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Liberty Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Mandalay Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mandalay Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Mandalay Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Liberty Gold and Mandalay Resources

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

The idea behind Liberty Gold Corp and Mandalay Resources Corp 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.