Correlation Between Sea and Torex Gold

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

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

Diversification Opportunities for Sea and Torex Gold

-0.37

Correlation Coefficient

Sea  Torex Gold

Very good diversification

The 3 months correlation between Sea and Torex is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources and Sea 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 Sea are associated (or correlated) with Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Sea i.e., Sea and Torex Gold go up and down completely randomly.

Pair Corralation between Sea and Torex Gold

Allowing for the 90-day total investment horizon Sea is expected to generate 0.7 times more return on investment than Torex Gold. However, Sea is 1.43 times less risky than Torex Gold. It trades about 0.14 of its potential returns per unit of risk. Torex Gold Resources is currently generating about -0.01 per unit of risk. If you would invest  9,915  in Sea on October 25, 2024 and sell it today you would earn a total of  1,921  from holding Sea or generate 19.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Sea  vs.  Torex Gold Resources

Sea

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Torex Gold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sea and Torex Gold

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

The idea behind Sea and Torex Gold 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.