Correlation Between Geodrill and TNR Gold

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

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

Diversification Opportunities for Geodrill and TNR Gold

-0.32

Correlation Coefficient

Geodrill  TNR Gold

Very good diversification

The 3 months correlation between Geodrill and TNR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Geodrill Limited and TNR Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TNR Gold Corp and Geodrill 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 Geodrill Limited are associated (or correlated) with TNR Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TNR Gold Corp has no effect on the direction of Geodrill i.e., Geodrill and TNR Gold go up and down completely randomly.

Pair Corralation between Geodrill and TNR Gold

Assuming the 90 days trading horizon Geodrill Limited is expected to generate 0.46 times more return on investment than TNR Gold. However, Geodrill Limited is 2.16 times less risky than TNR Gold. It trades about 0.1 of its potential returns per unit of risk. TNR Gold Corp is currently generating about 0.02 per unit of risk. If you would invest  267.00  in Geodrill Limited on September 20, 2024 and sell it today you would earn a total of  32.00  from holding Geodrill Limited or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Geodrill Limited  vs.  TNR Gold Corp

Geodrill Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Geodrill Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Geodrill displayed solid returns over the last few months and may actually be approaching a breakup point.

TNR Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TNR Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, TNR Gold is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Geodrill and TNR Gold

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

The idea behind Geodrill Limited and TNR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.