Correlation Between Tree Island and Stakeholder Gold

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

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

Diversification Opportunities for Tree Island and Stakeholder Gold

-0.09

Correlation Coefficient

Tree Island  Stakeholder Gold

Good diversification

The 3 months correlation between Tree and Stakeholder is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and Stakeholder Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stakeholder Gold Corp and Tree Island 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 Tree Island Steel are associated (or correlated) with Stakeholder Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stakeholder Gold Corp has no effect on the direction of Tree Island i.e., Tree Island and Stakeholder Gold go up and down completely randomly.

Pair Corralation between Tree Island and Stakeholder Gold

Assuming the 90 days trading horizon Tree Island Steel is expected to under-perform the Stakeholder Gold. But the stock apears to be less risky and, when comparing its historical volatility, Tree Island Steel is 1.81 times less risky than Stakeholder Gold. The stock trades about -0.11 of its potential returns per unit of risk. The Stakeholder Gold Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Stakeholder Gold Corp on December 23, 2024 and sell it today you would lose (1.00) from holding Stakeholder Gold Corp or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tree Island Steel  vs.  Stakeholder Gold Corp

Tree Island Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tree Island Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Stakeholder Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stakeholder Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Stakeholder Gold 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 Tree Island and Stakeholder Gold

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

The idea behind Tree Island Steel and Stakeholder 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.