Correlation Between Sherritt International and Freegold Ventures

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

By analyzing existing cross correlation between Sherritt International and Freegold Ventures Limited, you can compare the effects of market volatilities on Sherritt International and Freegold Ventures 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 Sherritt International with a short position of Freegold Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherritt International and Freegold Ventures.

Diversification Opportunities for Sherritt International and Freegold Ventures

0.39

Correlation Coefficient

Sherritt International  Freegold Ventures

Weak diversification

The 3 months correlation between Sherritt and Freegold is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sherritt International and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures and Sherritt 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 Sherritt International are associated (or correlated) with Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Sherritt International i.e., Sherritt International and Freegold Ventures go up and down completely randomly.

Pair Corralation between Sherritt International and Freegold Ventures

Assuming the 90 days horizon Sherritt International is expected to generate 1341.33 times less return on investment than Freegold Ventures. In addition to that, Sherritt International is 1.22 times more volatile than Freegold Ventures Limited. It trades about 0.0 of its total potential returns per unit of risk. Freegold Ventures Limited is currently generating about 0.08 per unit of volatility. If you would invest  50.00  in Freegold Ventures Limited on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Freegold Ventures Limited or generate 20.0% return on investment over 90 days.

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

Sherritt International  vs.  Freegold Ventures Limited

Sherritt International

Risk-Adjusted Performance

Very Weak

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

Freegold Ventures

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Freegold Ventures Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Freegold Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sherritt International and Freegold Ventures

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

The idea behind Sherritt International and Freegold Ventures Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.