Correlation Between Baru Gold and Big Ridge

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

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

Diversification Opportunities for Baru Gold and Big Ridge

0.2

Correlation Coefficient

Baru Gold  Big Ridge

Modest diversification

The 3 months correlation between Baru and Big is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baru Gold Corp and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Baru Gold 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 Baru Gold Corp are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Baru Gold i.e., Baru Gold and Big Ridge go up and down completely randomly.

Pair Corralation between Baru Gold and Big Ridge

Assuming the 90 days horizon Baru Gold Corp is expected to under-perform the Big Ridge. In addition to that, Baru Gold is 1.38 times more volatile than Big Ridge Gold. It trades about -0.02 of its total potential returns per unit of risk. Big Ridge Gold is currently generating about -0.03 per unit of volatility. If you would invest  7.00  in Big Ridge Gold on December 28, 2024 and sell it today you would lose (1.80) from holding Big Ridge Gold or give up 25.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Baru Gold Corp  vs.  Big Ridge Gold

Baru Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baru Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Big Ridge Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Baru Gold and Big Ridge

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

The idea behind Baru Gold Corp and Big Ridge 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.