Correlation Between Golden Goliath and Bear Creek

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

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

Diversification Opportunities for Golden Goliath and Bear Creek

0.47

Correlation Coefficient

Golden Goliath  Bear Creek

Very weak diversification

The 3 months correlation between Golden and Bear is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Golden Goliath Resources and Bear Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Creek Mining and Golden Goliath 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 Goliath Resources are associated (or correlated) with Bear Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Creek Mining has no effect on the direction of Golden Goliath i.e., Golden Goliath and Bear Creek go up and down completely randomly.

Pair Corralation between Golden Goliath and Bear Creek

Assuming the 90 days horizon Golden Goliath Resources is expected to under-perform the Bear Creek. In addition to that, Golden Goliath is 1.94 times more volatile than Bear Creek Mining. It trades about -0.15 of its total potential returns per unit of risk. Bear Creek Mining is currently generating about 0.19 per unit of volatility. If you would invest  35.00  in Bear Creek Mining on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Bear Creek Mining or generate 22.86% return on investment over 90 days.

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

Golden Goliath Resources  vs.  Bear Creek Mining

Golden Goliath Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Golden Goliath showed solid returns over the last few months and may actually be approaching a breakup point.

Bear Creek Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bear Creek Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bear Creek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Goliath and Bear Creek

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

The idea behind Golden Goliath Resources and Bear Creek Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.