Correlation Between Aya Gold and GoGold Resources

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

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

Diversification Opportunities for Aya Gold and GoGold Resources

0.74

Correlation Coefficient

Aya Gold  GoGold Resources

Poor diversification

The 3 months correlation between Aya and GoGold is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aya Gold Silver and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and Aya 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 Aya Gold Silver 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 Aya Gold i.e., Aya Gold and GoGold Resources go up and down completely randomly.

Pair Corralation between Aya Gold and GoGold Resources

Assuming the 90 days trading horizon Aya Gold is expected to generate 13.71 times less return on investment than GoGold Resources. In addition to that, Aya Gold is 1.12 times more volatile than GoGold Resources. It trades about 0.01 of its total potential returns per unit of risk. GoGold Resources is currently generating about 0.08 per unit of volatility. If you would invest  112.00  in GoGold Resources on September 3, 2024 and sell it today you would earn a total of  18.00  from holding GoGold Resources or generate 16.07% return on investment over 90 days.

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

Aya Gold Silver  vs.  GoGold Resources

Aya Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aya Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aya Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

GoGold Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, GoGold Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aya Gold and GoGold Resources

The main advantage of trading using opposite Aya Gold and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aya Gold 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 Aya Gold Silver 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.