Correlation Between Wesdome Gold and Lupaka Gold

Can any of the company-specific risk be diversified away by investing in both Wesdome Gold and Lupaka 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 Wesdome Gold and Lupaka Gold 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 Lupaka Gold Corp, you can compare the effects of market volatilities on Wesdome Gold and Lupaka 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 Wesdome Gold with a short position of Lupaka Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and Lupaka Gold.

Diversification Opportunities for Wesdome Gold and Lupaka Gold

-0.25

Correlation Coefficient

Wesdome Gold  Lupaka Gold

Very good diversification

The 3 months correlation between Wesdome and Lupaka is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Lupaka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupaka Gold Corp 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 Lupaka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupaka Gold Corp has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and Lupaka Gold go up and down completely randomly.

Pair Corralation between Wesdome Gold and Lupaka Gold

If you would invest  900.00  in Wesdome Gold Mines on October 27, 2024 and sell it today you would earn a total of  89.00  from holding Wesdome Gold Mines or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Wesdome Gold Mines  vs.  Lupaka Gold Corp

Wesdome Gold Mines

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wesdome Gold Mines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Wesdome Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lupaka Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wesdome Gold and Lupaka Gold

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

The idea behind Wesdome Gold Mines and Lupaka 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.