Correlation Between White Gold and Palamina Corp

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

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

Diversification Opportunities for White Gold and Palamina Corp

0.78

Correlation Coefficient

White Gold  Palamina Corp

Poor diversification

The 3 months correlation between White and Palamina is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding White Gold Corp and Palamina Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palamina Corp and White 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 White Gold Corp are associated (or correlated) with Palamina Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palamina Corp has no effect on the direction of White Gold i.e., White Gold and Palamina Corp go up and down completely randomly.

Pair Corralation between White Gold and Palamina Corp

Assuming the 90 days horizon White Gold Corp is expected to generate 0.53 times more return on investment than Palamina Corp. However, White Gold Corp is 1.88 times less risky than Palamina Corp. It trades about -0.08 of its potential returns per unit of risk. Palamina Corp is currently generating about -0.09 per unit of risk. If you would invest  27.00  in White Gold Corp on September 27, 2024 and sell it today you would lose (6.00) from holding White Gold Corp or give up 22.22% of portfolio value over 90 days.

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

White Gold Corp  vs.  Palamina Corp

White Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days White Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Palamina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palamina Corp 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with White Gold and Palamina Corp

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

The idea behind White Gold Corp and Palamina Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.