Correlation Between Fremont Gold and Cabral Gold

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

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

Diversification Opportunities for Fremont Gold and Cabral Gold

-0.23

Correlation Coefficient

Fremont Gold  Cabral Gold

Very good diversification

The 3 months correlation between Fremont and Cabral is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and Fremont 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 Fremont Gold are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Fremont Gold i.e., Fremont Gold and Cabral Gold go up and down completely randomly.

Pair Corralation between Fremont Gold and Cabral Gold

Assuming the 90 days horizon Fremont Gold is expected to under-perform the Cabral Gold. In addition to that, Fremont Gold is 1.24 times more volatile than Cabral Gold. It trades about -0.22 of its total potential returns per unit of risk. Cabral Gold is currently generating about -0.01 per unit of volatility. If you would invest  18.00  in Cabral Gold on September 12, 2024 and sell it today you would lose (2.00) from holding Cabral Gold or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Fremont Gold  vs.  Cabral Gold

Fremont Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Fremont Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold 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 Fremont Gold and Cabral Gold

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

The idea behind Fremont Gold and Cabral Gold 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.