Correlation Between Magna Terra and Galantas Gold

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

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

Diversification Opportunities for Magna Terra and Galantas Gold

0.24

Correlation Coefficient

Magna Terra  Galantas Gold

Modest diversification

The 3 months correlation between Magna and Galantas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Magna Terra Minerals and Galantas Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galantas Gold Corp and Magna Terra 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 Magna Terra Minerals are associated (or correlated) with Galantas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galantas Gold Corp has no effect on the direction of Magna Terra i.e., Magna Terra and Galantas Gold go up and down completely randomly.

Pair Corralation between Magna Terra and Galantas Gold

Assuming the 90 days horizon Magna Terra is expected to generate 1.11 times less return on investment than Galantas Gold. In addition to that, Magna Terra is 1.05 times more volatile than Galantas Gold Corp. It trades about 0.1 of its total potential returns per unit of risk. Galantas Gold Corp is currently generating about 0.12 per unit of volatility. If you would invest  5.00  in Galantas Gold Corp on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Galantas Gold Corp or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Magna Terra Minerals  vs.  Galantas Gold Corp

Magna Terra Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Terra Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Magna Terra showed solid returns over the last few months and may actually be approaching a breakup point.

Galantas Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galantas 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, Galantas Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magna Terra and Galantas Gold

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

The idea behind Magna Terra Minerals and Galantas Gold Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.