Correlation Between Novo Resources and Altamira Gold

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

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

Diversification Opportunities for Novo Resources and Altamira Gold

0.09

Correlation Coefficient

Novo Resources  Altamira Gold

Significant diversification

The 3 months correlation between Novo and Altamira is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and Altamira Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altamira Gold Corp and Novo Resources 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 Novo Resources Corp are associated (or correlated) with Altamira Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altamira Gold Corp has no effect on the direction of Novo Resources i.e., Novo Resources and Altamira Gold go up and down completely randomly.

Pair Corralation between Novo Resources and Altamira Gold

Assuming the 90 days horizon Novo Resources Corp is expected to under-perform the Altamira Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Novo Resources Corp is 1.26 times less risky than Altamira Gold. The otc stock trades about -0.06 of its potential returns per unit of risk. The Altamira Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.03  in Altamira Gold Corp on September 3, 2024 and sell it today you would earn a total of  1.40  from holding Altamira Gold Corp or generate 17.43% return on investment over 90 days.

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

Novo Resources Corp  vs.  Altamira Gold Corp

Novo Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Altamira Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Novo Resources and Altamira Gold

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

The idea behind Novo Resources Corp and Altamira 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.