Correlation Between International Tower and Centerra Gold

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

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

Diversification Opportunities for International Tower and Centerra Gold

0.82

Correlation Coefficient

International Tower  Centerra Gold

Very poor diversification

The 3 months correlation between International and Centerra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding International Tower Hill and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and International Tower 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 International Tower Hill are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of International Tower i.e., International Tower and Centerra Gold go up and down completely randomly.

Pair Corralation between International Tower and Centerra Gold

Assuming the 90 days trading horizon International Tower Hill is expected to generate 2.26 times more return on investment than Centerra Gold. However, International Tower is 2.26 times more volatile than Centerra Gold. It trades about -0.01 of its potential returns per unit of risk. Centerra Gold is currently generating about -0.09 per unit of risk. If you would invest  76.00  in International Tower Hill on September 22, 2024 and sell it today you would lose (9.00) from holding International Tower Hill or give up 11.84% of portfolio value over 90 days.

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

International Tower Hill  vs.  Centerra Gold

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic 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.

Pair Trading with International Tower and Centerra Gold

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

The idea behind International Tower Hill and Centerra Gold 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.