Correlation Between TomaGold and Goldgroup Mining

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

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

Diversification Opportunities for TomaGold and Goldgroup Mining

-0.19

Correlation Coefficient

TomaGold  Goldgroup Mining

Good diversification

The 3 months correlation between TomaGold and Goldgroup is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding TomaGold and Goldgroup Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldgroup Mining and TomaGold 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 TomaGold are associated (or correlated) with Goldgroup Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldgroup Mining has no effect on the direction of TomaGold i.e., TomaGold and Goldgroup Mining go up and down completely randomly.

Pair Corralation between TomaGold and Goldgroup Mining

Assuming the 90 days horizon TomaGold is expected to generate 1.35 times more return on investment than Goldgroup Mining. However, TomaGold is 1.35 times more volatile than Goldgroup Mining. It trades about 0.13 of its potential returns per unit of risk. Goldgroup Mining is currently generating about 0.05 per unit of risk. If you would invest  0.61  in TomaGold on September 5, 2024 and sell it today you would earn a total of  0.46  from holding TomaGold or generate 75.41% return on investment over 90 days.

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

TomaGold  vs.  Goldgroup Mining

TomaGold

Risk-Adjusted Performance

10 of 100

OK

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

Goldgroup Mining

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with TomaGold and Goldgroup Mining

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

The idea behind TomaGold and Goldgroup Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.