Correlation Between CRA International and Gossan Resources

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

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

Diversification Opportunities for CRA International and Gossan Resources

-0.71

Correlation Coefficient

CRA International  Gossan Resources

Pay attention - limited upside

The 3 months correlation between CRA and Gossan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Gossan Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources and CRA International 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 CRA International are associated (or correlated) with Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of CRA International i.e., CRA International and Gossan Resources go up and down completely randomly.

Pair Corralation between CRA International and Gossan Resources

Given the investment horizon of 90 days CRA International is expected to generate 0.4 times more return on investment than Gossan Resources. However, CRA International is 2.52 times less risky than Gossan Resources. It trades about 0.05 of its potential returns per unit of risk. Gossan Resources Limited is currently generating about -0.12 per unit of risk. If you would invest  17,488  in CRA International on September 29, 2024 and sell it today you would earn a total of  1,196  from holding CRA International or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

CRA International  vs.  Gossan Resources Limited

CRA International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gossan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gossan Resources Limited 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.

Pair Trading with CRA International and Gossan Resources

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

The idea behind CRA International and Gossan Resources Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.