Correlation Between Carlin Gold and Romios Gold

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

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

Diversification Opportunities for Carlin Gold and Romios Gold

0.28

Correlation Coefficient

Carlin Gold  Romios Gold

Modest diversification

The 3 months correlation between Carlin and Romios is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carlin Gold and Romios Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romios Gold Resources and Carlin 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 Carlin Gold are associated (or correlated) with Romios Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romios Gold Resources has no effect on the direction of Carlin Gold i.e., Carlin Gold and Romios Gold go up and down completely randomly.

Pair Corralation between Carlin Gold and Romios Gold

Assuming the 90 days horizon Carlin Gold is expected to under-perform the Romios Gold. But the stock apears to be less risky and, when comparing its historical volatility, Carlin Gold is 18.44 times less risky than Romios Gold. The stock trades about -0.15 of its potential returns per unit of risk. The Romios Gold Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Romios Gold Resources on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Romios Gold Resources or generate 0.0% return on investment over 90 days.

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

Carlin Gold  vs.  Romios Gold Resources

Carlin Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlin Gold 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 basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Romios Gold Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romios Gold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Romios Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlin Gold and Romios Gold

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

The idea behind Carlin Gold and Romios Gold 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.