Correlation Between TeraGo and TRX Gold

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

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

Diversification Opportunities for TeraGo and TRX Gold

-0.66

Correlation Coefficient

TeraGo  TRX Gold

Excellent diversification

The 3 months correlation between TeraGo and TRX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding TeraGo Inc and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold Corp and TeraGo 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 TeraGo Inc are associated (or correlated) with TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of TeraGo i.e., TeraGo and TRX Gold go up and down completely randomly.

Pair Corralation between TeraGo and TRX Gold

Assuming the 90 days trading horizon TeraGo Inc is expected to generate 2.97 times more return on investment than TRX Gold. However, TeraGo is 2.97 times more volatile than TRX Gold Corp. It trades about -0.02 of its potential returns per unit of risk. TRX Gold Corp is currently generating about -0.1 per unit of risk. If you would invest  121.00  in TeraGo Inc on December 21, 2024 and sell it today you would lose (10.00) from holding TeraGo Inc or give up 8.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

TeraGo Inc  vs.  TRX Gold Corp

TeraGo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TeraGo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TeraGo is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TRX Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRX 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 basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with TeraGo and TRX Gold

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

The idea behind TeraGo Inc and TRX 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..