Correlation Between Pacific Ridge and Cassiar Gold

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

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

Diversification Opportunities for Pacific Ridge and Cassiar Gold

0.68

Correlation Coefficient

Pacific Ridge  Cassiar Gold

Poor diversification

The 3 months correlation between Pacific and Cassiar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Ridge Exploration and Cassiar Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cassiar Gold Corp and Pacific Ridge 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 Pacific Ridge Exploration are associated (or correlated) with Cassiar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassiar Gold Corp has no effect on the direction of Pacific Ridge i.e., Pacific Ridge and Cassiar Gold go up and down completely randomly.

Pair Corralation between Pacific Ridge and Cassiar Gold

Assuming the 90 days horizon Pacific Ridge Exploration is not expected to generate positive returns. Moreover, Pacific Ridge is 7.97 times more volatile than Cassiar Gold Corp. It trades away all of its potential returns to assume current level of volatility. Cassiar Gold Corp is currently generating about 0.11 per unit of risk. If you would invest  19.00  in Cassiar Gold Corp on October 12, 2024 and sell it today you would earn a total of  1.00  from holding Cassiar Gold Corp or generate 5.26% return on investment over 90 days.

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

Pacific Ridge Exploration  vs.  Cassiar Gold Corp

Pacific Ridge Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Ridge Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Ridge showed solid returns over the last few months and may actually be approaching a breakup point.

Cassiar Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cassiar Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Pacific Ridge and Cassiar Gold

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

The idea behind Pacific Ridge Exploration and Cassiar 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.