Correlation Between Discovery Silver and GoGold Resources

Can any of the company-specific risk be diversified away by investing in both Discovery Silver and GoGold Resources 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 Discovery Silver and GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Discovery Silver and GoGold Resources

0.87

Correlation Coefficient

Discovery Silver  GoGold Resources

Very poor diversification

The 3 months correlation between Discovery and GoGold is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Discovery Silver Corp and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and Discovery Silver 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 Discovery Silver Corp are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Discovery Silver i.e., Discovery Silver and GoGold Resources go up and down completely randomly.

Pair Corralation between Discovery Silver and GoGold Resources

Assuming the 90 days trading horizon Discovery Silver is expected to generate 1.23 times less return on investment than GoGold Resources. In addition to that, Discovery Silver is 1.31 times more volatile than GoGold Resources. It trades about 0.08 of its total potential returns per unit of risk. GoGold Resources is currently generating about 0.13 per unit of volatility. If you would invest  168.00  in GoGold Resources on April 22, 2025 and sell it today you would earn a total of  46.00  from holding GoGold Resources or generate 27.38% return on investment over 90 days.

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

Discovery Silver Corp  vs.  GoGold Resources

Discovery Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Discovery Silver Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Discovery Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

GoGold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, GoGold Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Discovery Silver and GoGold Resources

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

The idea behind Discovery Silver Corp and GoGold 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.