Correlation Between Norsemont Mining and Falcon Gold

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

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

Diversification Opportunities for Norsemont Mining and Falcon Gold

-0.39

Correlation Coefficient

Norsemont Mining  Falcon Gold

Very good diversification

The 3 months correlation between Norsemont and Falcon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Norsemont Mining and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp and Norsemont Mining 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 Norsemont Mining are associated (or correlated) with Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Norsemont Mining i.e., Norsemont Mining and Falcon Gold go up and down completely randomly.

Pair Corralation between Norsemont Mining and Falcon Gold

Assuming the 90 days horizon Norsemont Mining is expected to generate 0.9 times more return on investment than Falcon Gold. However, Norsemont Mining is 1.11 times less risky than Falcon Gold. It trades about 0.13 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  8.10  in Norsemont Mining on September 12, 2024 and sell it today you would earn a total of  5.90  from holding Norsemont Mining or generate 72.84% return on investment over 90 days.

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

Norsemont Mining  vs.  Falcon Gold Corp

Norsemont Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Norsemont Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norsemont Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Falcon Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Falcon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Norsemont Mining and Falcon Gold

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

The idea behind Norsemont Mining and Falcon Gold 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.