Correlation Between ValOre Metals and GoGold Resources

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

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

Diversification Opportunities for ValOre Metals and GoGold Resources

0.76

Correlation Coefficient

ValOre Metals  GoGold Resources

Poor diversification

The 3 months correlation between ValOre and GoGold is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and ValOre 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 ValOre Metals Corp are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of ValOre Metals i.e., ValOre Metals and GoGold Resources go up and down completely randomly.

Pair Corralation between ValOre Metals and GoGold Resources

Given the investment horizon of 90 days ValOre Metals is expected to generate 6.99 times less return on investment than GoGold Resources. In addition to that, ValOre Metals is 1.62 times more volatile than GoGold Resources. It trades about 0.03 of its total potential returns per unit of risk. GoGold Resources is currently generating about 0.33 per unit of volatility. If you would invest  112.00  in GoGold Resources on October 22, 2024 and sell it today you would earn a total of  26.00  from holding GoGold Resources or generate 23.21% return on investment over 90 days.

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

ValOre Metals Corp  vs.  GoGold Resources

ValOre Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ValOre Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

GoGold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoGold Resources 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 fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ValOre Metals and GoGold Resources

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

The idea behind ValOre Metals Corp and GoGold 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.