Correlation Between Rimrock Gold and Dakshidin

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

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

Diversification Opportunities for Rimrock Gold and Dakshidin

-0.24

Correlation Coefficient

Rimrock Gold  Dakshidin

Very good diversification

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

Pair Corralation between Rimrock Gold and Dakshidin

Given the investment horizon of 90 days Rimrock Gold is expected to generate 1.31 times less return on investment than Dakshidin. In addition to that, Rimrock Gold is 1.31 times more volatile than Dakshidin Corporation. It trades about 0.07 of its total potential returns per unit of risk. Dakshidin Corporation is currently generating about 0.12 per unit of volatility. If you would invest  0.08  in Dakshidin Corporation on September 11, 2024 and sell it today you would earn a total of  0.05  from holding Dakshidin Corporation or generate 62.5% return on investment over 90 days.

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

Rimrock Gold Corp  vs.  Dakshidin Corp.

Rimrock Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dakshidin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dakshidin Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Dakshidin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rimrock Gold and Dakshidin

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

The idea behind Rimrock Gold Corp and Dakshidin Corporation 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.