Correlation Between Starcore International and Chesapeake Gold
Can any of the company-specific risk be diversified away by investing in both Starcore International and Chesapeake 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 Starcore International and Chesapeake Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starcore International Mines and Chesapeake Gold Corp, you can compare the effects of market volatilities on Starcore International and Chesapeake 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 Starcore International with a short position of Chesapeake Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starcore International and Chesapeake Gold.
Diversification Opportunities for Starcore International and Chesapeake Gold
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Starcore and Chesapeake is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Starcore International Mines and Chesapeake Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Gold Corp and Starcore International 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 Starcore International Mines are associated (or correlated) with Chesapeake Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Gold Corp has no effect on the direction of Starcore International i.e., Starcore International and Chesapeake Gold go up and down completely randomly.
Pair Corralation between Starcore International and Chesapeake Gold
Assuming the 90 days trading horizon Starcore International Mines is expected to generate 1.52 times more return on investment than Chesapeake Gold. However, Starcore International is 1.52 times more volatile than Chesapeake Gold Corp. It trades about 0.07 of its potential returns per unit of risk. Chesapeake Gold Corp is currently generating about -0.15 per unit of risk. If you would invest 12.00 in Starcore International Mines on September 5, 2024 and sell it today you would earn a total of 2.00 from holding Starcore International Mines or generate 16.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Starcore International Mines vs. Chesapeake Gold Corp
Performance |
Timeline |
Starcore International |
Chesapeake Gold Corp |
Starcore International and Chesapeake Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Starcore International and Chesapeake Gold
The main advantage of trading using opposite Starcore International and Chesapeake Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starcore International position performs unexpectedly, Chesapeake 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 Chesapeake Gold will offset losses from the drop in Chesapeake Gold's long position.Starcore International vs. First Majestic Silver | Starcore International vs. Ivanhoe Energy | Starcore International vs. Orezone Gold Corp | Starcore International vs. Faraday Copper Corp |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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