Correlation Between Azucar Minerals and Strikepoint Gold

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

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

Diversification Opportunities for Azucar Minerals and Strikepoint Gold

-0.54

Correlation Coefficient

Azucar Minerals  Strikepoint Gold

Excellent diversification

The 3 months correlation between Azucar and Strikepoint is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Azucar Minerals and Strikepoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strikepoint Gold and Azucar Minerals 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 Azucar Minerals are associated (or correlated) with Strikepoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strikepoint Gold has no effect on the direction of Azucar Minerals i.e., Azucar Minerals and Strikepoint Gold go up and down completely randomly.

Pair Corralation between Azucar Minerals and Strikepoint Gold

Assuming the 90 days horizon Azucar Minerals is expected to generate 0.98 times more return on investment than Strikepoint Gold. However, Azucar Minerals is 1.02 times less risky than Strikepoint Gold. It trades about 0.03 of its potential returns per unit of risk. Strikepoint Gold is currently generating about 0.02 per unit of risk. If you would invest  5.00  in Azucar Minerals on September 23, 2024 and sell it today you would lose (2.50) from holding Azucar Minerals or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Azucar Minerals  vs.  Strikepoint Gold

Azucar Minerals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azucar Minerals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Azucar Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Strikepoint Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strikepoint Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Strikepoint Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azucar Minerals and Strikepoint Gold

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

The idea behind Azucar Minerals and Strikepoint 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.