Correlation Between TRAINLINE PLC and Gold Road

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

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

Diversification Opportunities for TRAINLINE PLC and Gold Road

-0.3

Correlation Coefficient

TRAINLINE PLC  Gold Road

Very good diversification

The 3 months correlation between TRAINLINE and Gold is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Gold Road go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and Gold Road

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 1.35 times more return on investment than Gold Road. However, TRAINLINE PLC is 1.35 times more volatile than Gold Road Resources. It trades about -0.01 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.03 per unit of risk. If you would invest  328.00  in TRAINLINE PLC LS on April 21, 2025 and sell it today you would lose (16.00) from holding TRAINLINE PLC LS or give up 4.88% of portfolio value over 90 days.

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

TRAINLINE PLC LS  vs.  Gold Road Resources

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

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

Gold Road Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TRAINLINE PLC and Gold Road

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

The idea behind TRAINLINE PLC LS and Gold Road Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.