Correlation Between Torex Gold and Heliostar Metals

Can any of the company-specific risk be diversified away by investing in both Torex Gold and Heliostar Metals 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 Heliostar Metals 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 Heliostar Metals, you can compare the effects of market volatilities on Torex Gold and Heliostar Metals 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 Heliostar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torex Gold and Heliostar Metals.

Diversification Opportunities for Torex Gold and Heliostar Metals

0.89

Correlation Coefficient

Torex Gold  Heliostar Metals

Very poor diversification

The 3 months correlation between Torex and Heliostar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals 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 Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Torex Gold i.e., Torex Gold and Heliostar Metals go up and down completely randomly.

Pair Corralation between Torex Gold and Heliostar Metals

Assuming the 90 days horizon Torex Gold is expected to generate 2.64 times less return on investment than Heliostar Metals. But when comparing it to its historical volatility, Torex Gold Resources is 1.83 times less risky than Heliostar Metals. It trades about 0.05 of its potential returns per unit of risk. Heliostar Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Heliostar Metals on December 4, 2024 and sell it today you would earn a total of  35.00  from holding Heliostar Metals or generate 194.44% return on investment over 90 days.

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

Torex Gold Resources  vs.  Heliostar Metals

Torex Gold Resources

Risk-Adjusted Performance

Very Weak

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

Heliostar Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heliostar Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heliostar Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Torex Gold and Heliostar Metals

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

The idea behind Torex Gold Resources and Heliostar Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.