Correlation Between Leviathan Gold and Steppe Gold

Can any of the company-specific risk be diversified away by investing in both Leviathan Gold and Steppe 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 Steppe 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 Steppe Gold, you can compare the effects of market volatilities on Leviathan Gold and Steppe 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 Steppe Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leviathan Gold and Steppe Gold.

Diversification Opportunities for Leviathan Gold and Steppe Gold

0.63

Correlation Coefficient

Leviathan Gold  Steppe Gold

Poor diversification

The 3 months correlation between Leviathan and Steppe is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Leviathan Gold and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold 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 Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of Leviathan Gold i.e., Leviathan Gold and Steppe Gold go up and down completely randomly.

Pair Corralation between Leviathan Gold and Steppe Gold

Assuming the 90 days horizon Leviathan Gold is expected to generate 3.49 times more return on investment than Steppe Gold. However, Leviathan Gold is 3.49 times more volatile than Steppe Gold. It trades about 0.18 of its potential returns per unit of risk. Steppe Gold is currently generating about 0.1 per unit of risk. If you would invest  3.71  in Leviathan Gold on December 27, 2024 and sell it today you would earn a total of  7.29  from holding Leviathan Gold or generate 196.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Leviathan Gold  vs.  Steppe Gold

Leviathan Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leviathan Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Leviathan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Steppe Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steppe Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Steppe Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leviathan Gold and Steppe Gold

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

The idea behind Leviathan Gold and Steppe 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.