Correlation Between Newcore Gold and Gold Springs

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

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

Diversification Opportunities for Newcore Gold and Gold Springs

-0.06

Correlation Coefficient

Newcore Gold  Gold Springs

Good diversification

The 3 months correlation between Newcore and Gold is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Newcore Gold and Gold Springs Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Springs Resource and Newcore 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 Newcore Gold are associated (or correlated) with Gold Springs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Springs Resource has no effect on the direction of Newcore Gold i.e., Newcore Gold and Gold Springs go up and down completely randomly.

Pair Corralation between Newcore Gold and Gold Springs

Assuming the 90 days horizon Newcore Gold is expected to under-perform the Gold Springs. In addition to that, Newcore Gold is 1.03 times more volatile than Gold Springs Resource. It trades about -0.17 of its total potential returns per unit of risk. Gold Springs Resource is currently generating about -0.01 per unit of volatility. If you would invest  7.00  in Gold Springs Resource on September 2, 2024 and sell it today you would lose (0.20) from holding Gold Springs Resource or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Newcore Gold  vs.  Gold Springs Resource

Newcore Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newcore Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newcore Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gold Springs Resource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Springs Resource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Springs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Newcore Gold and Gold Springs

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

The idea behind Newcore Gold and Gold Springs Resource 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.