Correlation Between Summit Materials and HighGold Mining

Can any of the company-specific risk be diversified away by investing in both Summit Materials and HighGold Mining 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 Summit Materials and HighGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Materials and HighGold Mining, you can compare the effects of market volatilities on Summit Materials and HighGold Mining 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 Summit Materials with a short position of HighGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and HighGold Mining.

Diversification Opportunities for Summit Materials and HighGold Mining

0.0

Correlation Coefficient

Summit Materials  HighGold Mining

Pay attention - limited upside

The 3 months correlation between Summit and HighGold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and HighGold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HighGold Mining and Summit Materials 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 Summit Materials are associated (or correlated) with HighGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HighGold Mining has no effect on the direction of Summit Materials i.e., Summit Materials and HighGold Mining go up and down completely randomly.

Pair Corralation between Summit Materials and HighGold Mining

If you would invest (100.00) in HighGold Mining on December 29, 2024 and sell it today you would earn a total of  100.00  from holding HighGold Mining or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Summit Materials  vs.  HighGold Mining

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HighGold Mining

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Summit Materials and HighGold Mining

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

The idea behind Summit Materials and HighGold Mining 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.