Correlation Between Tristar Gold and Rockhaven Resources

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

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

Diversification Opportunities for Tristar Gold and Rockhaven Resources

-0.54

Correlation Coefficient

Tristar Gold  Rockhaven Resources

Excellent diversification

The 3 months correlation between Tristar and Rockhaven is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tristar Gold and Rockhaven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockhaven Resources and Tristar 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 Tristar Gold are associated (or correlated) with Rockhaven Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockhaven Resources has no effect on the direction of Tristar Gold i.e., Tristar Gold and Rockhaven Resources go up and down completely randomly.

Pair Corralation between Tristar Gold and Rockhaven Resources

Assuming the 90 days horizon Tristar Gold is expected to generate 0.76 times more return on investment than Rockhaven Resources. However, Tristar Gold is 1.31 times less risky than Rockhaven Resources. It trades about 0.1 of its potential returns per unit of risk. Rockhaven Resources is currently generating about -0.01 per unit of risk. If you would invest  13.00  in Tristar Gold on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Tristar Gold or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Tristar Gold  vs.  Rockhaven Resources

Tristar Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tristar Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tristar Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Rockhaven Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tristar Gold and Rockhaven Resources

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

The idea behind Tristar Gold and Rockhaven Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.