Correlation Between Revival Gold and Eloro Resources

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

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

Diversification Opportunities for Revival Gold and Eloro Resources

0.6

Correlation Coefficient

Revival Gold  Eloro Resources

Poor diversification

The 3 months correlation between Revival and Eloro is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Revival Gold i.e., Revival Gold and Eloro Resources go up and down completely randomly.

Pair Corralation between Revival Gold and Eloro Resources

Assuming the 90 days horizon Revival Gold is expected to generate 2.17 times less return on investment than Eloro Resources. But when comparing it to its historical volatility, Revival Gold is 2.23 times less risky than Eloro Resources. It trades about 0.19 of its potential returns per unit of risk. Eloro Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Eloro Resources on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Eloro Resources or generate 22.03% return on investment over 90 days.

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

Revival Gold  vs.  Eloro Resources

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revival Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Revival Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Eloro Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eloro Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eloro Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Revival Gold and Eloro Resources

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

The idea behind Revival Gold and Eloro 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.