Correlation Between Cabral Gold and Cassiar Gold

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

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

Diversification Opportunities for Cabral Gold and Cassiar Gold

0.68

Correlation Coefficient

Cabral Gold  Cassiar Gold

Poor diversification

The 3 months correlation between Cabral and Cassiar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cabral Gold and Cassiar Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cassiar Gold Corp and Cabral 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 Cabral Gold are associated (or correlated) with Cassiar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassiar Gold Corp has no effect on the direction of Cabral Gold i.e., Cabral Gold and Cassiar Gold go up and down completely randomly.

Pair Corralation between Cabral Gold and Cassiar Gold

Assuming the 90 days horizon Cabral Gold is expected to under-perform the Cassiar Gold. In addition to that, Cabral Gold is 1.82 times more volatile than Cassiar Gold Corp. It trades about -0.05 of its total potential returns per unit of risk. Cassiar Gold Corp is currently generating about -0.07 per unit of volatility. If you would invest  18.00  in Cassiar Gold Corp on September 13, 2024 and sell it today you would lose (4.00) from holding Cassiar Gold Corp or give up 22.22% of portfolio value over 90 days.

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

Cabral Gold  vs.  Cassiar Gold Corp

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cassiar Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cassiar Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cabral Gold and Cassiar Gold

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

The idea behind Cabral Gold and Cassiar 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.