Correlation Between Themac Resources and Golden Goliath

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

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

Diversification Opportunities for Themac Resources and Golden Goliath

0.24

Correlation Coefficient

Themac Resources  Golden Goliath

Modest diversification

The 3 months correlation between Themac and Golden is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Golden Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Goliath Resources and Themac 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 Themac Resources Group are associated (or correlated) with Golden Goliath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Goliath Resources has no effect on the direction of Themac Resources i.e., Themac Resources and Golden Goliath go up and down completely randomly.

Pair Corralation between Themac Resources and Golden Goliath

Assuming the 90 days horizon Themac Resources is expected to generate 10.17 times less return on investment than Golden Goliath. But when comparing it to its historical volatility, Themac Resources Group is 4.38 times less risky than Golden Goliath. It trades about 0.09 of its potential returns per unit of risk. Golden Goliath Resources is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Golden Goliath Resources on September 15, 2024 and sell it today you would lose (7.00) from holding Golden Goliath Resources or give up 77.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

Themac Resources Group  vs.  Golden Goliath Resources

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Themac Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Golden Goliath Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Golden Goliath reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Themac Resources and Golden Goliath

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

The idea behind Themac Resources Group and Golden Goliath Resources 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.