Correlation Between Wesdome Gold and Heliostar Metals

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

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

Diversification Opportunities for Wesdome Gold and Heliostar Metals

0.55

Correlation Coefficient

Wesdome Gold  Heliostar Metals

Very weak diversification

The 3 months correlation between Wesdome and Heliostar is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals and Wesdome 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 Wesdome Gold Mines are associated (or correlated) with Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and Heliostar Metals go up and down completely randomly.

Pair Corralation between Wesdome Gold and Heliostar Metals

Assuming the 90 days horizon Wesdome Gold Mines is expected to generate 0.7 times more return on investment than Heliostar Metals. However, Wesdome Gold Mines is 1.42 times less risky than Heliostar Metals. It trades about -0.17 of its potential returns per unit of risk. Heliostar Metals is currently generating about -0.12 per unit of risk. If you would invest  988.00  in Wesdome Gold Mines on October 11, 2024 and sell it today you would lose (84.00) from holding Wesdome Gold Mines or give up 8.5% of portfolio value over 90 days.

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

Wesdome Gold Mines  vs.  Heliostar Metals

Wesdome Gold Mines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wesdome Gold Mines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Wesdome Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heliostar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heliostar Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wesdome Gold and Heliostar Metals

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

The idea behind Wesdome Gold Mines and Heliostar Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.