Correlation Between Truscott Mining and Prodigy Gold

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

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

Diversification Opportunities for Truscott Mining and Prodigy Gold

0.01

Correlation Coefficient

Truscott Mining  Prodigy Gold

Significant diversification

The 3 months correlation between Truscott and Prodigy is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and Prodigy Gold NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodigy Gold NL and Truscott Mining 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 Truscott Mining Corp are associated (or correlated) with Prodigy Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodigy Gold NL has no effect on the direction of Truscott Mining i.e., Truscott Mining and Prodigy Gold go up and down completely randomly.

Pair Corralation between Truscott Mining and Prodigy Gold

Assuming the 90 days trading horizon Truscott Mining is expected to generate 4.55 times less return on investment than Prodigy Gold. But when comparing it to its historical volatility, Truscott Mining Corp is 5.39 times less risky than Prodigy Gold. It trades about 0.08 of its potential returns per unit of risk. Prodigy Gold NL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Prodigy Gold NL on October 24, 2024 and sell it today you would lose (0.10) from holding Prodigy Gold NL or give up 33.33% of portfolio value over 90 days.

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

Truscott Mining Corp  vs.  Prodigy Gold NL

Truscott Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Truscott Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Truscott Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Prodigy Gold NL

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Truscott Mining and Prodigy Gold

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

The idea behind Truscott Mining Corp and Prodigy Gold NL 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..