Correlation Between Falcon Gold and Cerrado Gold

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

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

Diversification Opportunities for Falcon Gold and Cerrado Gold

-0.4

Correlation Coefficient

Falcon Gold  Cerrado Gold

Very good diversification

The 3 months correlation between Falcon and Cerrado is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Gold Corp and Cerrado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold Corp and Falcon 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 Falcon Gold Corp are associated (or correlated) with Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold Corp has no effect on the direction of Falcon Gold i.e., Falcon Gold and Cerrado Gold go up and down completely randomly.

Pair Corralation between Falcon Gold and Cerrado Gold

Given the investment horizon of 90 days Falcon Gold Corp is expected to generate 6.82 times more return on investment than Cerrado Gold. However, Falcon Gold is 6.82 times more volatile than Cerrado Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Cerrado Gold Corp is currently generating about 0.04 per unit of risk. If you would invest  2.50  in Falcon Gold Corp on April 23, 2025 and sell it today you would lose (1.50) from holding Falcon Gold Corp or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Falcon Gold Corp  vs.  Cerrado Gold Corp

Falcon Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Falcon Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Cerrado Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cerrado Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cerrado Gold may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Falcon Gold and Cerrado Gold

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

The idea behind Falcon Gold Corp and Cerrado Gold Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.