Correlation Between Troilus Gold and Steppe Gold

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

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

Diversification Opportunities for Troilus Gold and Steppe Gold

-0.24

Correlation Coefficient

Troilus Gold  Steppe Gold

Very good diversification

The 3 months correlation between Troilus and Steppe is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Troilus Gold Corp and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold and Troilus 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 Troilus Gold Corp are associated (or correlated) with Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of Troilus Gold i.e., Troilus Gold and Steppe Gold go up and down completely randomly.

Pair Corralation between Troilus Gold and Steppe Gold

Assuming the 90 days trading horizon Troilus Gold Corp is expected to under-perform the Steppe Gold. In addition to that, Troilus Gold is 1.25 times more volatile than Steppe Gold. It trades about -0.01 of its total potential returns per unit of risk. Steppe Gold is currently generating about 0.01 per unit of volatility. If you would invest  64.00  in Steppe Gold on September 5, 2024 and sell it today you would lose (1.00) from holding Steppe Gold or give up 1.56% of portfolio value over 90 days.

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

Troilus Gold Corp  vs.  Steppe Gold

Troilus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Steppe Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Troilus Gold and Steppe Gold

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

The idea behind Troilus Gold Corp and Steppe Gold 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.