Correlation Between Lode Gold and Foran Mining

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

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

Diversification Opportunities for Lode Gold and Foran Mining

0.0

Correlation Coefficient

Lode Gold  Foran Mining

Pay attention - limited upside

The 3 months correlation between Lode and Foran is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lode Gold Resources and Foran Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foran Mining and Lode 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 Lode Gold Resources are associated (or correlated) with Foran Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foran Mining has no effect on the direction of Lode Gold i.e., Lode Gold and Foran Mining go up and down completely randomly.

Pair Corralation between Lode Gold and Foran Mining

Assuming the 90 days horizon Lode Gold Resources is expected to generate 4.68 times more return on investment than Foran Mining. However, Lode Gold is 4.68 times more volatile than Foran Mining. It trades about 0.08 of its potential returns per unit of risk. Foran Mining is currently generating about -0.15 per unit of risk. If you would invest  20.00  in Lode Gold Resources on October 26, 2024 and sell it today you would earn a total of  5.00  from holding Lode Gold Resources or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lode Gold Resources  vs.  Foran Mining

Lode Gold Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lode Gold Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lode Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Foran Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lode Gold and Foran Mining

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

The idea behind Lode Gold Resources and Foran Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.