Correlation Between Revival Gold and Gold Terra

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

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

Diversification Opportunities for Revival Gold and Gold Terra

-0.5

Correlation Coefficient

Revival Gold  Gold Terra

Very good diversification

The 3 months correlation between Revival and Gold is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Gold Terra Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Terra Resource and Revival 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 Revival Gold are associated (or correlated) with Gold Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Terra Resource has no effect on the direction of Revival Gold i.e., Revival Gold and Gold Terra go up and down completely randomly.

Pair Corralation between Revival Gold and Gold Terra

Assuming the 90 days horizon Revival Gold is expected to generate 0.81 times more return on investment than Gold Terra. However, Revival Gold is 1.23 times less risky than Gold Terra. It trades about 0.07 of its potential returns per unit of risk. Gold Terra Resource is currently generating about 0.0 per unit of risk. If you would invest  28.00  in Revival Gold on December 2, 2024 and sell it today you would earn a total of  4.00  from holding Revival Gold or generate 14.29% return on investment over 90 days.

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

Revival Gold  vs.  Gold Terra Resource

Revival Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Revival Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Revival Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Gold Terra Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gold Terra Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gold Terra is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Revival Gold and Gold Terra

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

The idea behind Revival Gold and Gold Terra Resource 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.