Correlation Between Handeni Gold and Wesdome Gold

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

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

Diversification Opportunities for Handeni Gold and Wesdome Gold

-0.1

Correlation Coefficient

Handeni Gold  Wesdome Gold

Good diversification

The 3 months correlation between Handeni and Wesdome is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Handeni Gold and Wesdome Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesdome Gold Mines and Handeni 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 Handeni Gold are associated (or correlated) with Wesdome Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesdome Gold Mines has no effect on the direction of Handeni Gold i.e., Handeni Gold and Wesdome Gold go up and down completely randomly.

Pair Corralation between Handeni Gold and Wesdome Gold

Given the investment horizon of 90 days Handeni Gold is expected to generate 5.08 times more return on investment than Wesdome Gold. However, Handeni Gold is 5.08 times more volatile than Wesdome Gold Mines. It trades about 0.13 of its potential returns per unit of risk. Wesdome Gold Mines is currently generating about -0.07 per unit of risk. If you would invest  0.01  in Handeni Gold on September 26, 2024 and sell it today you would earn a total of  0.01  from holding Handeni Gold or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Handeni Gold  vs.  Wesdome Gold Mines

Handeni Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Handeni Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Handeni Gold demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Wesdome Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wesdome Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Handeni Gold and Wesdome Gold

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

The idea behind Handeni Gold and Wesdome Gold Mines 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .