Correlation Between MAS Gold and Carlin Gold

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

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

Diversification Opportunities for MAS Gold and Carlin Gold

0.32

Correlation Coefficient

MAS Gold  Carlin Gold

Weak diversification

The 3 months correlation between MAS and Carlin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MAS Gold Corp and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin Gold and MAS 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 MAS Gold Corp are associated (or correlated) with Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of MAS Gold i.e., MAS Gold and Carlin Gold go up and down completely randomly.

Pair Corralation between MAS Gold and Carlin Gold

Assuming the 90 days horizon MAS Gold Corp is expected to generate 15.03 times more return on investment than Carlin Gold. However, MAS Gold is 15.03 times more volatile than Carlin Gold. It trades about 0.1 of its potential returns per unit of risk. Carlin Gold is currently generating about -0.21 per unit of risk. If you would invest  2.00  in MAS Gold Corp on September 25, 2024 and sell it today you would lose (0.50) from holding MAS Gold Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

MAS Gold Corp  vs.  Carlin Gold

MAS Gold Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAS Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MAS Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Carlin Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlin Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with MAS Gold and Carlin Gold

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

The idea behind MAS Gold Corp and Carlin 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.