Correlation Between Torex Gold and Dynacor Gold

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

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

Diversification Opportunities for Torex Gold and Dynacor Gold

-0.73

Correlation Coefficient

Torex Gold  Dynacor Gold

Pay attention - limited upside

The 3 months correlation between Torex and Dynacor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines and Torex 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 Torex Gold Resources are associated (or correlated) with Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Torex Gold i.e., Torex Gold and Dynacor Gold go up and down completely randomly.

Pair Corralation between Torex Gold and Dynacor Gold

Assuming the 90 days horizon Torex Gold Resources is expected to generate 1.3 times more return on investment than Dynacor Gold. However, Torex Gold is 1.3 times more volatile than Dynacor Gold Mines. It trades about 0.2 of its potential returns per unit of risk. Dynacor Gold Mines is currently generating about -0.08 per unit of risk. If you would invest  1,925  in Torex Gold Resources on December 29, 2024 and sell it today you would earn a total of  757.00  from holding Torex Gold Resources or generate 39.32% return on investment over 90 days.

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

Torex Gold Resources  vs.  Dynacor Gold Mines

Torex Gold Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Torex Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Dynacor Gold Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynacor Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Torex Gold and Dynacor Gold

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

The idea behind Torex Gold Resources and Dynacor Gold Mines 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.