Correlation Between NioCorp Developments and GoGold Resources

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

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

Diversification Opportunities for NioCorp Developments and GoGold Resources

0.33

Correlation Coefficient

NioCorp Developments  GoGold Resources

Weak diversification

The 3 months correlation between NioCorp and GoGold is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and GoGold Resources go up and down completely randomly.

Pair Corralation between NioCorp Developments and GoGold Resources

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the GoGold Resources. In addition to that, NioCorp Developments is 1.13 times more volatile than GoGold Resources. It trades about -0.07 of its total potential returns per unit of risk. GoGold Resources is currently generating about 0.06 per unit of volatility. If you would invest  82.00  in GoGold Resources on September 3, 2024 and sell it today you would earn a total of  9.00  from holding GoGold Resources or generate 10.98% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  GoGold Resources

NioCorp Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

GoGold Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, GoGold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NioCorp Developments and GoGold Resources

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

The idea behind NioCorp Developments Ltd and GoGold 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.