Correlation Between Leviathan Gold and Dacian Gold

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

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

Diversification Opportunities for Leviathan Gold and Dacian Gold

-0.39

Correlation Coefficient

Leviathan Gold  Dacian Gold

Very good diversification

The 3 months correlation between Leviathan and Dacian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Leviathan Gold and Dacian Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dacian Gold Limited and Leviathan 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 Leviathan Gold are associated (or correlated) with Dacian Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dacian Gold Limited has no effect on the direction of Leviathan Gold i.e., Leviathan Gold and Dacian Gold go up and down completely randomly.

Pair Corralation between Leviathan Gold and Dacian Gold

Assuming the 90 days horizon Leviathan Gold is expected to generate 1.89 times less return on investment than Dacian Gold. In addition to that, Leviathan Gold is 3.44 times more volatile than Dacian Gold Limited. It trades about 0.01 of its total potential returns per unit of risk. Dacian Gold Limited is currently generating about 0.06 per unit of volatility. If you would invest  5.01  in Dacian Gold Limited on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Dacian Gold Limited or generate 19.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.41%
Values	Daily Returns

Leviathan Gold  vs.  Dacian Gold Limited

Leviathan Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leviathan Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dacian Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Leviathan Gold and Dacian Gold

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

The idea behind Leviathan Gold and Dacian Gold Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.