Correlation Between Red Pine and Endurance Gold

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

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

Diversification Opportunities for Red Pine and Endurance Gold

0.13

Correlation Coefficient

Red Pine  Endurance Gold

Average diversification

The 3 months correlation between Red and Endurance is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Endurance Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endurance Gold and Red Pine 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 Red Pine Exploration are associated (or correlated) with Endurance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endurance Gold has no effect on the direction of Red Pine i.e., Red Pine and Endurance Gold go up and down completely randomly.

Pair Corralation between Red Pine and Endurance Gold

Assuming the 90 days horizon Red Pine Exploration is expected to generate 1.51 times more return on investment than Endurance Gold. However, Red Pine is 1.51 times more volatile than Endurance Gold. It trades about 0.02 of its potential returns per unit of risk. Endurance Gold is currently generating about 0.02 per unit of risk. If you would invest  8.71  in Red Pine Exploration on December 29, 2024 and sell it today you would lose (0.21) from holding Red Pine Exploration or give up 2.41% of portfolio value over 90 days.

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

Red Pine Exploration  vs.  Endurance Gold

Red Pine Exploration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Red Pine Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Red Pine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Endurance Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endurance Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Endurance Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Red Pine and Endurance Gold

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

The idea behind Red Pine Exploration and Endurance Gold 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 Transaction History module to view history of all your transactions and understand their impact on performance.