Correlation Between Provenance Gold and AbraSilver Resource

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

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

Diversification Opportunities for Provenance Gold and AbraSilver Resource

-0.63

Correlation Coefficient

Provenance Gold  AbraSilver Resource

Excellent diversification

The 3 months correlation between Provenance and AbraSilver is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Provenance Gold Corp and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp and Provenance 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 Provenance Gold Corp are associated (or correlated) with AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Provenance Gold i.e., Provenance Gold and AbraSilver Resource go up and down completely randomly.

Pair Corralation between Provenance Gold and AbraSilver Resource

Assuming the 90 days horizon Provenance Gold Corp is expected to generate 2.25 times more return on investment than AbraSilver Resource. However, Provenance Gold is 2.25 times more volatile than AbraSilver Resource Corp. It trades about 0.01 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about -0.02 per unit of risk. If you would invest  19.00  in Provenance Gold Corp on October 10, 2024 and sell it today you would lose (1.00) from holding Provenance Gold Corp or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Provenance Gold Corp  vs.  AbraSilver Resource Corp

Provenance Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

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

AbraSilver Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AbraSilver Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Provenance Gold and AbraSilver Resource

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

The idea behind Provenance Gold Corp and AbraSilver Resource 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.