Correlation Between Treasury Metals and Dacian Gold

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

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

Diversification Opportunities for Treasury Metals and Dacian Gold

-0.49

Correlation Coefficient

Treasury Metals  Dacian Gold

Very good diversification

The 3 months correlation between Treasury and Dacian is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Metals and Dacian Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dacian Gold Limited and Treasury Metals 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 Treasury Metals are associated (or correlated) with Dacian Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dacian Gold Limited has no effect on the direction of Treasury Metals i.e., Treasury Metals and Dacian Gold go up and down completely randomly.

Pair Corralation between Treasury Metals and Dacian Gold

Assuming the 90 days horizon Treasury Metals is expected to generate 5.29 times less return on investment than Dacian Gold. In addition to that, Treasury Metals is 2.01 times more volatile than Dacian Gold Limited. It trades about 0.01 of its total potential returns per unit of risk. Dacian Gold Limited is currently generating about 0.06 per unit of volatility. If you would invest  5.01  in Dacian Gold Limited on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Dacian Gold Limited or generate 19.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.22%
Values	Daily Returns

Treasury Metals  vs.  Dacian Gold Limited

Treasury Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dacian Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Treasury Metals and Dacian Gold

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

The idea behind Treasury Metals and Dacian Gold Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.