Correlation Between Falcon Gold and Maxtech Ventures

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

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

Diversification Opportunities for Falcon Gold and Maxtech Ventures

-0.4

Correlation Coefficient

Falcon Gold  Maxtech Ventures

Very good diversification

The 3 months correlation between Falcon and Maxtech is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Gold Corp and Maxtech Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxtech Ventures and Falcon 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 Falcon Gold Corp are associated (or correlated) with Maxtech Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxtech Ventures has no effect on the direction of Falcon Gold i.e., Falcon Gold and Maxtech Ventures go up and down completely randomly.

Pair Corralation between Falcon Gold and Maxtech Ventures

Assuming the 90 days horizon Falcon Gold is expected to generate 1.82 times less return on investment than Maxtech Ventures. In addition to that, Falcon Gold is 1.06 times more volatile than Maxtech Ventures. It trades about 0.04 of its total potential returns per unit of risk. Maxtech Ventures is currently generating about 0.07 per unit of volatility. If you would invest  7.50  in Maxtech Ventures on September 15, 2024 and sell it today you would earn a total of  2.00  from holding Maxtech Ventures or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.17%
Values	Daily Returns

Falcon Gold Corp  vs.  Maxtech Ventures

Falcon Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maxtech Ventures

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Maxtech Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical indicators, Maxtech Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcon Gold and Maxtech Ventures

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

The idea behind Falcon Gold Corp and Maxtech Ventures 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.