Correlation Between Barrick Gold and ROYAL ROAD

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

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

Diversification Opportunities for Barrick Gold and ROYAL ROAD

0.7

Correlation Coefficient

Barrick Gold  ROYAL ROAD

Poor diversification

The 3 months correlation between Barrick and ROYAL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and ROYAL ROAD MIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYAL ROAD MIN and Barrick 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 Barrick Gold are associated (or correlated) with ROYAL ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYAL ROAD MIN has no effect on the direction of Barrick Gold i.e., Barrick Gold and ROYAL ROAD go up and down completely randomly.

Pair Corralation between Barrick Gold and ROYAL ROAD

Assuming the 90 days horizon Barrick Gold is expected to generate 3.47 times less return on investment than ROYAL ROAD. But when comparing it to its historical volatility, Barrick Gold is 3.39 times less risky than ROYAL ROAD. It trades about 0.08 of its potential returns per unit of risk. ROYAL ROAD MIN is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.35  in ROYAL ROAD MIN on April 24, 2025 and sell it today you would earn a total of  1.30  from holding ROYAL ROAD MIN or generate 20.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Barrick Gold  vs.  ROYAL ROAD MIN

Barrick Gold

Risk-Adjusted Performance

Modest

Over the last 90 days Barrick Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ROYAL ROAD MIN

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ROYAL ROAD MIN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ROYAL ROAD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and ROYAL ROAD

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

The idea behind Barrick Gold and ROYAL ROAD MIN 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.