Correlation Between US GoldMining and Golden Energy

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

By analyzing existing cross correlation between US GoldMining Common and Golden Energy Offshore, you can compare the effects of market volatilities on US GoldMining and Golden Energy 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 US GoldMining with a short position of Golden Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GoldMining and Golden Energy.

Diversification Opportunities for US GoldMining and Golden Energy

0.48

Correlation Coefficient

US GoldMining  Golden Energy

Very weak diversification

The 3 months correlation between USGO and Golden is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding US GoldMining Common and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore and US GoldMining 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 US GoldMining Common are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of US GoldMining i.e., US GoldMining and Golden Energy go up and down completely randomly.

Pair Corralation between US GoldMining and Golden Energy

Given the investment horizon of 90 days US GoldMining Common is expected to under-perform the Golden Energy. In addition to that, US GoldMining is 2.31 times more volatile than Golden Energy Offshore. It trades about -0.05 of its total potential returns per unit of risk. Golden Energy Offshore is currently generating about 0.22 per unit of volatility. If you would invest  160.00  in Golden Energy Offshore on February 18, 2025 and sell it today you would earn a total of  10.00  from holding Golden Energy Offshore or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

US GoldMining Common  vs.  Golden Energy Offshore

US GoldMining Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days US GoldMining Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Golden Energy Offshore

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Golden Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with US GoldMining and Golden Energy

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

The idea behind US GoldMining Common and Golden Energy Offshore 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.