Correlation Between Valeura Energy and Golden Minerals

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

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

Diversification Opportunities for Valeura Energy and Golden Minerals

-0.54

Correlation Coefficient

Valeura Energy  Golden Minerals

Excellent diversification

The 3 months correlation between Valeura and Golden is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals and Valeura Energy 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 Valeura Energy are associated (or correlated) with Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of Valeura Energy i.e., Valeura Energy and Golden Minerals go up and down completely randomly.

Pair Corralation between Valeura Energy and Golden Minerals

Assuming the 90 days trading horizon Valeura Energy is expected to generate 3.94 times less return on investment than Golden Minerals. But when comparing it to its historical volatility, Valeura Energy is 10.74 times less risky than Golden Minerals. It trades about 0.08 of its potential returns per unit of risk. Golden Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  988.00  in Golden Minerals on September 23, 2024 and sell it today you would lose (974.00) from holding Golden Minerals or give up 98.58% of portfolio value over 90 days.

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

Valeura Energy  vs.  Golden Minerals

Valeura Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Valeura Energy and Golden Minerals

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

The idea behind Valeura Energy and Golden Minerals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.