Correlation Between Strikepoint Gold and China Gold

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Can any of the company-specific risk be diversified away by investing in both Strikepoint Gold and China 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 Strikepoint Gold and China Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strikepoint Gold and China Gold International, you can compare the effects of market volatilities on Strikepoint Gold and China 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 Strikepoint Gold with a short position of China Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strikepoint Gold and China Gold.

Diversification Opportunities for Strikepoint Gold and China Gold

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Strikepoint and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Strikepoint Gold and China Gold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gold International and Strikepoint 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 Strikepoint Gold are associated (or correlated) with China Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gold International has no effect on the direction of Strikepoint Gold i.e., Strikepoint Gold and China Gold go up and down completely randomly.

Pair Corralation between Strikepoint Gold and China Gold

Assuming the 90 days horizon Strikepoint Gold is expected to generate 3.53 times more return on investment than China Gold. However, Strikepoint Gold is 3.53 times more volatile than China Gold International. It trades about 0.03 of its potential returns per unit of risk. China Gold International is currently generating about -0.04 per unit of risk. If you would invest  30.00  in Strikepoint Gold on September 22, 2024 and sell it today you would lose (12.00) from holding Strikepoint Gold or give up 40.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.21%
ValuesDaily Returns

Strikepoint Gold  vs.  China Gold International

 Performance 
       Timeline  
Strikepoint Gold 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Strikepoint Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Strikepoint Gold showed solid returns over the last few months and may actually be approaching a breakup point.
China Gold International 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, China Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Strikepoint Gold and China Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Strikepoint Gold and China Gold

The main advantage of trading using opposite Strikepoint Gold and China Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strikepoint Gold position performs unexpectedly, China 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 China Gold will offset losses from the drop in China Gold's long position.
The idea behind Strikepoint Gold and China Gold International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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