Correlation Between South Pacific and Golden Pursuit

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

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

Diversification Opportunities for South Pacific and Golden Pursuit

-0.16

Correlation Coefficient

South Pacific  Golden Pursuit

Good diversification

The 3 months correlation between South and Golden is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Golden Pursuit Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Pursuit Resources and South Pacific 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 South Pacific Metals are associated (or correlated) with Golden Pursuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Pursuit Resources has no effect on the direction of South Pacific i.e., South Pacific and Golden Pursuit go up and down completely randomly.

Pair Corralation between South Pacific and Golden Pursuit

Assuming the 90 days trading horizon South Pacific Metals is expected to generate 0.32 times more return on investment than Golden Pursuit. However, South Pacific Metals is 3.14 times less risky than Golden Pursuit. It trades about 0.47 of its potential returns per unit of risk. Golden Pursuit Resources is currently generating about 0.01 per unit of risk. If you would invest  45.00  in South Pacific Metals on October 25, 2024 and sell it today you would earn a total of  12.00  from holding South Pacific Metals or generate 26.67% return on investment over 90 days.

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

South Pacific Metals  vs.  Golden Pursuit Resources

South Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Golden Pursuit Resources

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Pursuit Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Golden Pursuit showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with South Pacific and Golden Pursuit

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

The idea behind South Pacific Metals and Golden Pursuit 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.