Correlation Between Stampede Drilling and Labrador Gold

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

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

Diversification Opportunities for Stampede Drilling and Labrador Gold

0.67

Correlation Coefficient

Stampede Drilling  Labrador Gold

Poor diversification

The 3 months correlation between Stampede and Labrador is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp and Stampede Drilling 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 Stampede Drilling are associated (or correlated) with Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Labrador Gold go up and down completely randomly.

Pair Corralation between Stampede Drilling and Labrador Gold

Assuming the 90 days horizon Stampede Drilling is expected to generate 0.6 times more return on investment than Labrador Gold. However, Stampede Drilling is 1.68 times less risky than Labrador Gold. It trades about -0.01 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.02 per unit of risk. If you would invest  32.00  in Stampede Drilling on October 9, 2024 and sell it today you would lose (13.00) from holding Stampede Drilling or give up 40.62% of portfolio value over 90 days.

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

Stampede Drilling  vs.  Labrador Gold Corp

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stampede Drilling and Labrador Gold

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

The idea behind Stampede Drilling and Labrador Gold Corp 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.