Correlation Between FireFox Gold and Minera Alamos

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

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

Diversification Opportunities for FireFox Gold and Minera Alamos

0.74

Correlation Coefficient

FireFox Gold  Minera Alamos

Poor diversification

The 3 months correlation between FireFox and Minera is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FireFox Gold Corp and Minera Alamos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minera Alamos and FireFox 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 FireFox Gold Corp are associated (or correlated) with Minera Alamos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minera Alamos has no effect on the direction of FireFox Gold i.e., FireFox Gold and Minera Alamos go up and down completely randomly.

Pair Corralation between FireFox Gold and Minera Alamos

Assuming the 90 days horizon FireFox Gold Corp is expected to generate 1.4 times more return on investment than Minera Alamos. However, FireFox Gold is 1.4 times more volatile than Minera Alamos. It trades about -0.01 of its potential returns per unit of risk. Minera Alamos is currently generating about -0.04 per unit of risk. If you would invest  2.98  in FireFox Gold Corp on September 19, 2024 and sell it today you would lose (0.51) from holding FireFox Gold Corp or give up 17.11% of portfolio value over 90 days.

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

FireFox Gold Corp  vs.  Minera Alamos

FireFox Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Minera Alamos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minera Alamos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FireFox Gold and Minera Alamos

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

The idea behind FireFox Gold Corp and Minera Alamos 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.