Correlation Between Polymetal International and Brightrock Gold

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

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

Diversification Opportunities for Polymetal International and Brightrock Gold

0.61

Correlation Coefficient

Polymetal International  Brightrock Gold

Poor diversification

The 3 months correlation between Polymetal and Brightrock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Polymetal International PLC and Brightrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightrock Gold Corp and Polymetal International 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 Polymetal International PLC are associated (or correlated) with Brightrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightrock Gold Corp has no effect on the direction of Polymetal International i.e., Polymetal International and Brightrock Gold go up and down completely randomly.

Pair Corralation between Polymetal International and Brightrock Gold

Assuming the 90 days horizon Polymetal International PLC is expected to under-perform the Brightrock Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Polymetal International PLC is 1.52 times less risky than Brightrock Gold. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Brightrock Gold Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Brightrock Gold Corp on October 15, 2024 and sell it today you would lose (16.60) from holding Brightrock Gold Corp or give up 63.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.45%
Values	Daily Returns

Polymetal International PLC  vs.  Brightrock Gold Corp

Polymetal International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polymetal International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Polymetal International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brightrock Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Polymetal International and Brightrock Gold

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

The idea behind Polymetal International PLC and Brightrock Gold Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.