Correlation Between Torq Resources and Lumina Gold

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

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

Diversification Opportunities for Torq Resources and Lumina Gold

0.29

Correlation Coefficient

Torq Resources  Lumina Gold

Modest diversification

The 3 months correlation between Torq and Lumina is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Torq Resources and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold Corp and Torq 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 Torq Resources are associated (or correlated) with Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of Torq Resources i.e., Torq Resources and Lumina Gold go up and down completely randomly.

Pair Corralation between Torq Resources and Lumina Gold

Assuming the 90 days trading horizon Torq Resources is expected to under-perform the Lumina Gold. In addition to that, Torq Resources is 2.66 times more volatile than Lumina Gold Corp. It trades about -0.05 of its total potential returns per unit of risk. Lumina Gold Corp is currently generating about -0.05 per unit of volatility. If you would invest  53.00  in Lumina Gold Corp on September 4, 2024 and sell it today you would lose (2.00) from holding Lumina Gold Corp or give up 3.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Torq Resources  vs.  Lumina Gold Corp

Torq Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torq Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Torq Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Lumina Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lumina Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lumina Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Torq Resources and Lumina Gold

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

The idea behind Torq Resources and Lumina 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.