Correlation Between MAS Gold and Goldbank Mining

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

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

Diversification Opportunities for MAS Gold and Goldbank Mining

-0.23

Correlation Coefficient

MAS Gold  Goldbank Mining

Very good diversification

The 3 months correlation between MAS and Goldbank is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MAS Gold Corp and Goldbank Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldbank Mining Corp and MAS 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 MAS Gold Corp are associated (or correlated) with Goldbank Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldbank Mining Corp has no effect on the direction of MAS Gold i.e., MAS Gold and Goldbank Mining go up and down completely randomly.

Pair Corralation between MAS Gold and Goldbank Mining

Assuming the 90 days horizon MAS Gold Corp is expected to generate 7.66 times more return on investment than Goldbank Mining. However, MAS Gold is 7.66 times more volatile than Goldbank Mining Corp. It trades about 0.19 of its potential returns per unit of risk. Goldbank Mining Corp is currently generating about -0.21 per unit of risk. If you would invest  1.00  in MAS Gold Corp on September 22, 2024 and sell it today you would earn a total of  0.50  from holding MAS Gold Corp or generate 50.0% return on investment over 90 days.

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

MAS Gold Corp  vs.  Goldbank Mining Corp

MAS Gold Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAS Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, MAS Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Goldbank Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with MAS Gold and Goldbank Mining

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

The idea behind MAS Gold Corp and Goldbank Mining Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.