Correlation Between Tectonic Metals and Gold Springs

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

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

Diversification Opportunities for Tectonic Metals and Gold Springs

0.25

Correlation Coefficient

Tectonic Metals  Gold Springs

Modest diversification

The 3 months correlation between Tectonic and Gold is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Metals and Gold Springs Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Springs Resource and Tectonic Metals 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 Tectonic Metals are associated (or correlated) with Gold Springs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Springs Resource has no effect on the direction of Tectonic Metals i.e., Tectonic Metals and Gold Springs go up and down completely randomly.

Pair Corralation between Tectonic Metals and Gold Springs

Assuming the 90 days trading horizon Tectonic Metals is expected to generate 21.08 times more return on investment than Gold Springs. However, Tectonic Metals is 21.08 times more volatile than Gold Springs Resource. It trades about 0.14 of its potential returns per unit of risk. Gold Springs Resource is currently generating about 0.06 per unit of risk. If you would invest  5.00  in Tectonic Metals on April 23, 2025 and sell it today you would earn a total of  112.00  from holding Tectonic Metals or generate 2240.0% return on investment over 90 days.

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

Tectonic Metals  vs.  Gold Springs Resource

Tectonic Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Tectonic Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Gold Springs Resource

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Springs Resource are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Gold Springs displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tectonic Metals and Gold Springs

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

The idea behind Tectonic Metals and Gold Springs Resource 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.