Correlation Between Golden Goliath and Clifton Mining

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

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

Diversification Opportunities for Golden Goliath and Clifton Mining

0.19

Correlation Coefficient

Golden Goliath  Clifton Mining

Average diversification

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

Pair Corralation between Golden Goliath and Clifton Mining

Assuming the 90 days horizon Golden Goliath Resources is expected to generate 1.25 times more return on investment than Clifton Mining. However, Golden Goliath is 1.25 times more volatile than Clifton Mining Co. It trades about 0.04 of its potential returns per unit of risk. Clifton Mining Co is currently generating about 0.04 per unit of risk. If you would invest  5.00  in Golden Goliath Resources on August 18, 2024 and sell it today you would lose (0.50) from holding Golden Goliath Resources or give up 10.0% of portfolio value over 90 days.

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

Golden Goliath Resources  vs.  Clifton Mining Co

Golden Goliath Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Golden Goliath showed solid returns over the last few months and may actually be approaching a breakup point.

Clifton Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clifton Mining Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Clifton Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Goliath and Clifton Mining

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

The idea behind Golden Goliath Resources and Clifton Mining Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.