Correlation Between South Pacific and Cassiar Gold

Can any of the company-specific risk be diversified away by investing in both South Pacific and Cassiar 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 South Pacific and Cassiar Gold 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 Cassiar Gold Corp, you can compare the effects of market volatilities on South Pacific and Cassiar 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 South Pacific with a short position of Cassiar Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Pacific and Cassiar Gold.

Diversification Opportunities for South Pacific and Cassiar Gold

0.74

Correlation Coefficient

South Pacific  Cassiar Gold

Poor diversification

The 3 months correlation between South and Cassiar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Cassiar Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cassiar Gold Corp 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 Cassiar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassiar Gold Corp has no effect on the direction of South Pacific i.e., South Pacific and Cassiar Gold go up and down completely randomly.

Pair Corralation between South Pacific and Cassiar Gold

Assuming the 90 days trading horizon South Pacific Metals is expected to under-perform the Cassiar Gold. But the stock apears to be less risky and, when comparing its historical volatility, South Pacific Metals is 1.09 times less risky than Cassiar Gold. The stock trades about -0.18 of its potential returns per unit of risk. The Cassiar Gold Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Cassiar Gold Corp on October 8, 2024 and sell it today you would lose (1.00) from holding Cassiar Gold Corp or give up 4.76% of portfolio value over 90 days.

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

South Pacific Metals  vs.  Cassiar Gold Corp

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 unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cassiar Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with South Pacific and Cassiar Gold

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

The idea behind South Pacific Metals and Cassiar Gold Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.