Correlation Between Golden Metal and CAP LEASE

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

By analyzing existing cross correlation between Golden Metal Resources and CAP LEASE AVIATION, you can compare the effects of market volatilities on Golden Metal and CAP LEASE 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 Golden Metal with a short position of CAP LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and CAP LEASE.

Diversification Opportunities for Golden Metal and CAP LEASE

-0.58

Correlation Coefficient

Golden Metal  CAP LEASE

Excellent diversification

The 3 months correlation between Golden and CAP is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION and Golden Metal 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 Golden Metal Resources are associated (or correlated) with CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Golden Metal i.e., Golden Metal and CAP LEASE go up and down completely randomly.

Pair Corralation between Golden Metal and CAP LEASE

Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 1.67 times more return on investment than CAP LEASE. However, Golden Metal is 1.67 times more volatile than CAP LEASE AVIATION. It trades about 0.08 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.16 per unit of risk. If you would invest  2,450  in Golden Metal Resources on September 20, 2024 and sell it today you would earn a total of  450.00  from holding Golden Metal Resources or generate 18.37% return on investment over 90 days.

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

Golden Metal Resources  vs.  CAP LEASE AVIATION

Golden Metal Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Golden Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Golden Metal and CAP LEASE

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

The idea behind Golden Metal Resources and CAP LEASE AVIATION 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 CEOs Directory module to screen CEOs from public companies around the world.