Correlation Between GoGold Resources and Teuton Resources

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Can any of the company-specific risk be diversified away by investing in both GoGold Resources and Teuton Resources 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 GoGold Resources and Teuton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoGold Resources and Teuton Resources Corp, you can compare the effects of market volatilities on GoGold Resources and Teuton Resources 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 GoGold Resources with a short position of Teuton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoGold Resources and Teuton Resources.

Diversification Opportunities for GoGold Resources and Teuton Resources

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GoGold and Teuton is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Teuton Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teuton Resources Corp and GoGold Resources 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 GoGold Resources are associated (or correlated) with Teuton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teuton Resources Corp has no effect on the direction of GoGold Resources i.e., GoGold Resources and Teuton Resources go up and down completely randomly.

Pair Corralation between GoGold Resources and Teuton Resources

Assuming the 90 days trading horizon GoGold Resources is expected to generate 1.35 times more return on investment than Teuton Resources. However, GoGold Resources is 1.35 times more volatile than Teuton Resources Corp. It trades about -0.07 of its potential returns per unit of risk. Teuton Resources Corp is currently generating about -0.2 per unit of risk. If you would invest  136.00  in GoGold Resources on September 25, 2024 and sell it today you would lose (24.00) from holding GoGold Resources or give up 17.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

GoGold Resources  vs.  Teuton Resources Corp

 Performance 
       Timeline  
GoGold Resources 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days GoGold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Teuton Resources Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Teuton Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

GoGold Resources and Teuton Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GoGold Resources and Teuton Resources

The main advantage of trading using opposite GoGold Resources and Teuton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoGold Resources position performs unexpectedly, Teuton Resources 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 Teuton Resources will offset losses from the drop in Teuton Resources' long position.
The idea behind GoGold Resources and Teuton Resources 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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