Correlation Between TWC Enterprises and Eldorado Gold

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

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

Diversification Opportunities for TWC Enterprises and Eldorado Gold

0.19

Correlation Coefficient

TWC Enterprises  Eldorado Gold

Average diversification

The 3 months correlation between TWC and Eldorado is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TWC Enterprises Limited and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and TWC Enterprises 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 TWC Enterprises Limited are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of TWC Enterprises i.e., TWC Enterprises and Eldorado Gold go up and down completely randomly.

Pair Corralation between TWC Enterprises and Eldorado Gold

Assuming the 90 days horizon TWC Enterprises Limited is expected to under-perform the Eldorado Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, TWC Enterprises Limited is 1.22 times less risky than Eldorado Gold. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Eldorado Gold Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,536  in Eldorado Gold Corp on September 14, 2024 and sell it today you would earn a total of  188.00  from holding Eldorado Gold Corp or generate 12.24% return on investment over 90 days.

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

TWC Enterprises Limited  vs.  Eldorado Gold Corp

TWC Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TWC Enterprises Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TWC Enterprises is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TWC Enterprises and Eldorado Gold

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

The idea behind TWC Enterprises Limited and Eldorado 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.