Correlation Between Sitka Gold and Galiano Gold

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

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

Diversification Opportunities for Sitka Gold and Galiano Gold

0.5

Correlation Coefficient

Sitka Gold  Galiano Gold

Very weak diversification

The 3 months correlation between Sitka and Galiano is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sitka Gold Corp and Galiano Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galiano Gold and Sitka 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 Sitka Gold Corp are associated (or correlated) with Galiano Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galiano Gold has no effect on the direction of Sitka Gold i.e., Sitka Gold and Galiano Gold go up and down completely randomly.

Pair Corralation between Sitka Gold and Galiano Gold

Assuming the 90 days horizon Sitka Gold Corp is expected to generate 1.67 times more return on investment than Galiano Gold. However, Sitka Gold is 1.67 times more volatile than Galiano Gold. It trades about -0.13 of its potential returns per unit of risk. Galiano Gold is currently generating about -0.25 per unit of risk. If you would invest  28.00  in Sitka Gold Corp on September 24, 2024 and sell it today you would lose (4.00) from holding Sitka Gold Corp or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sitka Gold Corp  vs.  Galiano Gold

Sitka Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sitka Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Sitka Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Galiano Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galiano Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sitka Gold and Galiano Gold

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

The idea behind Sitka Gold Corp and Galiano Gold 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.