Correlation Between Provenance Gold and Clifton Mining

Can any of the company-specific risk be diversified away by investing in both Provenance Gold and Clifton Mining 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 Clifton Mining 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 Clifton Mining Co, you can compare the effects of market volatilities on Provenance Gold and Clifton Mining 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 Clifton Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provenance Gold and Clifton Mining.

Diversification Opportunities for Provenance Gold and Clifton Mining

-0.23

Correlation Coefficient

Provenance Gold  Clifton Mining

Very good diversification

The 3 months correlation between Provenance and Clifton is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Provenance Gold Corp and Clifton Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clifton Mining 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 Clifton Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clifton Mining has no effect on the direction of Provenance Gold i.e., Provenance Gold and Clifton Mining go up and down completely randomly.

Pair Corralation between Provenance Gold and Clifton Mining

Assuming the 90 days horizon Provenance Gold Corp is expected to generate 1.18 times more return on investment than Clifton Mining. However, Provenance Gold is 1.18 times more volatile than Clifton Mining Co. It trades about 0.14 of its potential returns per unit of risk. Clifton Mining Co is currently generating about -0.02 per unit of risk. If you would invest  12.00  in Provenance Gold Corp on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Provenance Gold Corp or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Provenance Gold Corp  vs.  Clifton Mining Co

Provenance Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Provenance Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Provenance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Clifton Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clifton Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Provenance Gold and Clifton Mining

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

The idea behind Provenance Gold Corp and Clifton Mining Co 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.