Correlation Between Romios Gold and Eagle Plains

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

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

Diversification Opportunities for Romios Gold and Eagle Plains

0.17

Correlation Coefficient

Romios Gold  Eagle Plains

Average diversification

The 3 months correlation between Romios and Eagle is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Romios Gold Resources and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains Resources and Romios 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 Romios Gold Resources are associated (or correlated) with Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of Romios Gold i.e., Romios Gold and Eagle Plains go up and down completely randomly.

Pair Corralation between Romios Gold and Eagle Plains

Given the investment horizon of 90 days Romios Gold Resources is expected to generate 4.39 times more return on investment than Eagle Plains. However, Romios Gold is 4.39 times more volatile than Eagle Plains Resources. It trades about 0.22 of its potential returns per unit of risk. Eagle Plains Resources is currently generating about 0.11 per unit of risk. If you would invest  1.00  in Romios Gold Resources on December 10, 2024 and sell it today you would earn a total of  1.00  from holding Romios Gold Resources or generate 100.0% return on investment over 90 days.

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

Romios Gold Resources  vs.  Eagle Plains Resources

Romios Gold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romios Gold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Romios Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Plains Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eagle Plains showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Romios Gold and Eagle Plains

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

The idea behind Romios Gold Resources and Eagle Plains Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.