Correlation Between Dacian Gold and Precipitate Gold

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

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

Diversification Opportunities for Dacian Gold and Precipitate Gold

0.21

Correlation Coefficient

Dacian Gold  Precipitate Gold

Modest diversification

The 3 months correlation between Dacian and Precipitate is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dacian Gold Limited and Precipitate Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipitate Gold Corp and Dacian 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 Dacian Gold Limited are associated (or correlated) with Precipitate Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipitate Gold Corp has no effect on the direction of Dacian Gold i.e., Dacian Gold and Precipitate Gold go up and down completely randomly.

Pair Corralation between Dacian Gold and Precipitate Gold

If you would invest  4.87  in Precipitate Gold Corp on September 4, 2024 and sell it today you would lose (0.33) from holding Precipitate Gold Corp or give up 6.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Dacian Gold Limited  vs.  Precipitate Gold Corp

Dacian Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Precipitate Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Precipitate Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Precipitate Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dacian Gold and Precipitate Gold

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

The idea behind Dacian Gold Limited and Precipitate 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.