Correlation Between Pasofino Gold and Falcon Gold

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

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

Diversification Opportunities for Pasofino Gold and Falcon Gold

0.66

Correlation Coefficient

Pasofino Gold  Falcon Gold

Poor diversification

The 3 months correlation between Pasofino and Falcon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pasofino Gold Limited and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp and Pasofino 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 Pasofino Gold Limited are associated (or correlated) with Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Pasofino Gold i.e., Pasofino Gold and Falcon Gold go up and down completely randomly.

Pair Corralation between Pasofino Gold and Falcon Gold

Assuming the 90 days trading horizon Pasofino Gold Limited is expected to generate 0.39 times more return on investment than Falcon Gold. However, Pasofino Gold Limited is 2.56 times less risky than Falcon Gold. It trades about 0.13 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about -0.07 per unit of risk. If you would invest  54.00  in Pasofino Gold Limited on October 9, 2024 and sell it today you would earn a total of  4.00  from holding Pasofino Gold Limited or generate 7.41% return on investment over 90 days.

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

Pasofino Gold Limited  vs.  Falcon Gold Corp

Pasofino Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pasofino Gold Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Falcon Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Pasofino Gold and Falcon Gold

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

The idea behind Pasofino Gold Limited and Falcon 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.