Correlation Between Red Pine and Roscan Gold

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

Diversification Opportunities for Red Pine and Roscan Gold

-0.3

Correlation Coefficient

Red Pine  Roscan Gold

Very good diversification

The 3 months correlation between Red and Roscan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Roscan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roscan Gold Corp 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 Roscan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roscan Gold Corp has no effect on the direction of Red Pine i.e., Red Pine and Roscan Gold go up and down completely randomly.

Pair Corralation between Red Pine and Roscan Gold

Assuming the 90 days horizon Red Pine is expected to generate 3.39 times less return on investment than Roscan Gold. But when comparing it to its historical volatility, Red Pine Exploration is 1.42 times less risky than Roscan Gold. It trades about 0.02 of its potential returns per unit of risk. Roscan Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Roscan Gold Corp on December 28, 2024 and sell it today you would earn a total of  0.30  from holding Roscan Gold Corp or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Red Pine Exploration  vs.  Roscan Gold Corp

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.

Roscan Gold Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Red Pine and Roscan Gold

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

The idea behind Red Pine Exploration and Roscan 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.