Correlation Between Sitka Gold and Gungnir Resources

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

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

Diversification Opportunities for Sitka Gold and Gungnir Resources

0.48

Correlation Coefficient

Sitka Gold  Gungnir Resources

Very weak diversification

The 3 months correlation between Sitka and Gungnir is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sitka Gold Corp and Gungnir Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gungnir Resources and Sitka 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 Sitka Gold Corp are associated (or correlated) with Gungnir Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gungnir Resources has no effect on the direction of Sitka Gold i.e., Sitka Gold and Gungnir Resources go up and down completely randomly.

Pair Corralation between Sitka Gold and Gungnir Resources

Assuming the 90 days horizon Sitka Gold Corp is expected to under-perform the Gungnir Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Sitka Gold Corp is 1.36 times less risky than Gungnir Resources. The otc stock trades about -0.03 of its potential returns per unit of risk. The Gungnir Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Gungnir Resources on November 28, 2024 and sell it today you would earn a total of  0.40  from holding Gungnir Resources or generate 22.22% return on investment over 90 days.

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

Sitka Gold Corp  vs.  Gungnir Resources

Sitka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sitka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gungnir Resources

Risk-Adjusted Performance

Modest

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

Pair Trading with Sitka Gold and Gungnir Resources

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

The idea behind Sitka Gold Corp and Gungnir 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.