Correlation Between Nuinsco Resources and Golden Lake

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

By analyzing existing cross correlation between Nuinsco Resources Limited and Golden Lake Exploration, you can compare the effects of market volatilities on Nuinsco Resources and Golden Lake 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 Nuinsco Resources with a short position of Golden Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuinsco Resources and Golden Lake.

Diversification Opportunities for Nuinsco Resources and Golden Lake

0.4

Correlation Coefficient

Nuinsco Resources  Golden Lake

Very weak diversification

The 3 months correlation between Nuinsco and Golden is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nuinsco Resources Limited and Golden Lake Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Lake Exploration and Nuinsco 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 Nuinsco Resources Limited are associated (or correlated) with Golden Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Lake Exploration has no effect on the direction of Nuinsco Resources i.e., Nuinsco Resources and Golden Lake go up and down completely randomly.

Pair Corralation between Nuinsco Resources and Golden Lake

Assuming the 90 days horizon Nuinsco Resources Limited is expected to generate 3.21 times more return on investment than Golden Lake. However, Nuinsco Resources is 3.21 times more volatile than Golden Lake Exploration. It trades about 0.05 of its potential returns per unit of risk. Golden Lake Exploration is currently generating about -0.04 per unit of risk. If you would invest  0.36  in Nuinsco Resources Limited on September 4, 2024 and sell it today you would lose (0.21) from holding Nuinsco Resources Limited or give up 58.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nuinsco Resources Limited  vs.  Golden Lake Exploration

Nuinsco Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuinsco Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nuinsco Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Golden Lake Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Lake Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with Nuinsco Resources and Golden Lake

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

The idea behind Nuinsco Resources Limited and Golden Lake Exploration 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.