Correlation Between International Tower and GoldMining

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

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

Diversification Opportunities for International Tower and GoldMining

0.43

Correlation Coefficient

International Tower  GoldMining

Very weak diversification

The 3 months correlation between International and GoldMining is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding International Tower Hill and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and International Tower 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 International Tower Hill are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of International Tower i.e., International Tower and GoldMining go up and down completely randomly.

Pair Corralation between International Tower and GoldMining

Considering the 90-day investment horizon International Tower Hill is expected to under-perform the GoldMining. In addition to that, International Tower is 2.03 times more volatile than GoldMining. It trades about -0.01 of its total potential returns per unit of risk. GoldMining is currently generating about 0.01 per unit of volatility. If you would invest  84.00  in GoldMining on August 30, 2024 and sell it today you would earn a total of  0.00  from holding GoldMining or generate 0.0% return on investment over 90 days.

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

International Tower Hill  vs.  GoldMining

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with International Tower and GoldMining

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

The idea behind International Tower Hill and GoldMining 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 Global Correlations module to find global opportunities by holding instruments from different markets.