Correlation Between Rimrock Gold and Golden Developing

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

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

Diversification Opportunities for Rimrock Gold and Golden Developing

0.34

Correlation Coefficient

Rimrock Gold  Golden Developing

Weak diversification

The 3 months correlation between Rimrock and Golden is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rimrock Gold Corp and Golden Developing Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Developing and Rimrock 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 Rimrock Gold Corp are associated (or correlated) with Golden Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Developing has no effect on the direction of Rimrock Gold i.e., Rimrock Gold and Golden Developing go up and down completely randomly.

Pair Corralation between Rimrock Gold and Golden Developing

Given the investment horizon of 90 days Rimrock Gold is expected to generate 20.0 times less return on investment than Golden Developing. But when comparing it to its historical volatility, Rimrock Gold Corp is 9.74 times less risky than Golden Developing. It trades about 0.06 of its potential returns per unit of risk. Golden Developing Solutions is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Golden Developing Solutions on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Golden Developing Solutions or generate 9.223372036854776E16% return on investment over 90 days.

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

Rimrock Gold Corp  vs.  Golden Developing Solutions

Rimrock Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Golden Developing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Developing Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Golden Developing reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rimrock Gold and Golden Developing

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

The idea behind Rimrock Gold Corp and Golden Developing Solutions 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.