Correlation Between Timberline Resources and Amani Gold

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

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

Diversification Opportunities for Timberline Resources and Amani Gold

0.0

Correlation Coefficient

Timberline Resources  Amani Gold

Pay attention - limited upside

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

Pair Corralation between Timberline Resources and Amani Gold

If you would invest (100.00) in Amani Gold Limited on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Amani Gold Limited or generate -100.0% return on investment over 90 days.

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

Timberline Resources  vs.  Amani Gold Limited

Timberline Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timberline Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Timberline Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Amani Gold Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Timberline Resources and Amani Gold

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

The idea behind Timberline Resources and Amani Gold Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.