Correlation Between NV Gold and Lupaka Gold

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

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

Diversification Opportunities for NV Gold and Lupaka Gold

0.69

Correlation Coefficient

NV Gold  Lupaka Gold

Poor diversification

The 3 months correlation between NVX and Lupaka is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NV Gold Corp and Lupaka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupaka Gold Corp and NV 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 NV Gold Corp are associated (or correlated) with Lupaka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupaka Gold Corp has no effect on the direction of NV Gold i.e., NV Gold and Lupaka Gold go up and down completely randomly.

Pair Corralation between NV Gold and Lupaka Gold

Assuming the 90 days horizon NV Gold Corp is expected to generate 0.91 times more return on investment than Lupaka Gold. However, NV Gold Corp is 1.1 times less risky than Lupaka Gold. It trades about -0.01 of its potential returns per unit of risk. Lupaka Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  19.00  in NV Gold Corp on December 20, 2024 and sell it today you would lose (3.00) from holding NV Gold Corp or give up 15.79% of portfolio value over 90 days.

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

NV Gold Corp  vs.  Lupaka Gold Corp

NV Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NV Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NV Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lupaka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lupaka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NV Gold and Lupaka Gold

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

The idea behind NV Gold Corp and Lupaka 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.