Correlation Between Metalla Royalty and China Gold

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

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

Diversification Opportunities for Metalla Royalty and China Gold

0.66

Correlation Coefficient

Metalla Royalty  China Gold

Poor diversification

The 3 months correlation between Metalla and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming and China Gold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gold International and Metalla Royalty 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 Metalla Royalty Streaming are associated (or correlated) with China Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gold International has no effect on the direction of Metalla Royalty i.e., Metalla Royalty and China Gold go up and down completely randomly.

Pair Corralation between Metalla Royalty and China Gold

Considering the 90-day investment horizon Metalla Royalty is expected to generate 1.6 times less return on investment than China Gold. In addition to that, Metalla Royalty is 1.13 times more volatile than China Gold International. It trades about 0.11 of its total potential returns per unit of risk. China Gold International is currently generating about 0.2 per unit of volatility. If you would invest  480.00  in China Gold International on December 28, 2024 and sell it today you would earn a total of  190.00  from holding China Gold International or generate 39.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Metalla Royalty Streaming  vs.  China Gold International

Metalla Royalty Streaming

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Metalla Royalty sustained solid returns over the last few months and may actually be approaching a breakup point.

China Gold International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, China Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalla Royalty and China Gold

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

The idea behind Metalla Royalty Streaming and China Gold International 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.