Correlation Between Western Investment and Damara Gold

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

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

Diversification Opportunities for Western Investment and Damara Gold

0.0

Correlation Coefficient

Western Investment  Damara Gold

Pay attention - limited upside

The 3 months correlation between Western and Damara is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Damara Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damara Gold Corp and Western Investment 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 Western Investment are associated (or correlated) with Damara Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damara Gold Corp has no effect on the direction of Western Investment i.e., Western Investment and Damara Gold go up and down completely randomly.

Pair Corralation between Western Investment and Damara Gold

If you would invest  49.00  in Western Investment on September 30, 2024 and sell it today you would earn a total of  6.00  from holding Western Investment or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Western Investment  vs.  Damara Gold Corp

Western Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Damara Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damara Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Damara Gold is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Western Investment and Damara Gold

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

The idea behind Western Investment and Damara Gold 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.