Correlation Between Labrador Gold and Exploits Discovery

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

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

Diversification Opportunities for Labrador Gold and Exploits Discovery

0.06

Correlation Coefficient

Labrador Gold  Exploits Discovery

Significant diversification

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

Pair Corralation between Labrador Gold and Exploits Discovery

Assuming the 90 days horizon Labrador Gold Corp is expected to generate 1.01 times more return on investment than Exploits Discovery. However, Labrador Gold is 1.01 times more volatile than Exploits Discovery Corp. It trades about 0.07 of its potential returns per unit of risk. Exploits Discovery Corp is currently generating about 0.01 per unit of risk. If you would invest  4.14  in Labrador Gold Corp on December 30, 2024 and sell it today you would earn a total of  0.66  from holding Labrador Gold Corp or generate 15.94% return on investment over 90 days.

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

Labrador Gold Corp  vs.  Exploits Discovery Corp

Labrador Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Labrador Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Labrador Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Exploits Discovery Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exploits Discovery Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Exploits Discovery is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Labrador Gold and Exploits Discovery

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

The idea behind Labrador Gold Corp and Exploits Discovery 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..