Correlation Between STORE ELECTRONIC and Roscan Gold

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

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

Diversification Opportunities for STORE ELECTRONIC and Roscan Gold

0.7

Correlation Coefficient

STORE ELECTRONIC  Roscan Gold

Poor diversification

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

Pair Corralation between STORE ELECTRONIC and Roscan Gold

Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 2.47 times less return on investment than Roscan Gold. But when comparing it to its historical volatility, STORE ELECTRONIC is 8.1 times less risky than Roscan Gold. It trades about 0.69 of its potential returns per unit of risk. Roscan Gold is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2.60  in Roscan Gold on March 26, 2025 and sell it today you would earn a total of  1.15  from holding Roscan Gold or generate 44.23% return on investment over 90 days.

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

STORE ELECTRONIC  vs.  Roscan Gold

STORE ELECTRONIC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Roscan Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roscan Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Roscan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STORE ELECTRONIC and Roscan Gold

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

The idea behind STORE ELECTRONIC and Roscan Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.