Correlation Between Journey Medical and Rimrock Gold

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

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

Diversification Opportunities for Journey Medical and Rimrock Gold

0.27

Correlation Coefficient

Journey Medical  Rimrock Gold

Modest diversification

The 3 months correlation between Journey and Rimrock is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Journey Medical Corp and Rimrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimrock Gold Corp and Journey Medical 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 Journey Medical Corp are associated (or correlated) with Rimrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimrock Gold Corp has no effect on the direction of Journey Medical i.e., Journey Medical and Rimrock Gold go up and down completely randomly.

Pair Corralation between Journey Medical and Rimrock Gold

Given the investment horizon of 90 days Journey Medical Corp is expected to under-perform the Rimrock Gold. But the stock apears to be less risky and, when comparing its historical volatility, Journey Medical Corp is 3.73 times less risky than Rimrock Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Rimrock Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Rimrock Gold Corp on September 20, 2024 and sell it today you would lose (0.01) from holding Rimrock Gold Corp or give up 25.0% of portfolio value over 90 days.

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

Journey Medical Corp  vs.  Rimrock Gold Corp

Journey Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rimrock Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Journey Medical and Rimrock Gold

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

The idea behind Journey Medical Corp and Rimrock 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.