Correlation Between Golden Metal and Heavitree Brewery

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

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

Diversification Opportunities for Golden Metal and Heavitree Brewery

0.56

Correlation Coefficient

Golden Metal  Heavitree Brewery

Very weak diversification

The 3 months correlation between Golden and Heavitree is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and Golden Metal 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 Metal Resources are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Golden Metal i.e., Golden Metal and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Golden Metal and Heavitree Brewery

Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 23.3 times more return on investment than Heavitree Brewery. However, Golden Metal is 23.3 times more volatile than Heavitree Brewery. It trades about 0.21 of its potential returns per unit of risk. Heavitree Brewery is currently generating about 0.13 per unit of risk. If you would invest  3,800  in Golden Metal Resources on April 24, 2025 and sell it today you would earn a total of  2,250  from holding Golden Metal Resources or generate 59.21% return on investment over 90 days.

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

Golden Metal Resources  vs.  Heavitree Brewery

Golden Metal Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Golden Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Golden Metal and Heavitree Brewery

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

The idea behind Golden Metal Resources and Heavitree Brewery 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.