Correlation Between Blue Star and Advance Gold

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

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

Diversification Opportunities for Blue Star and Advance Gold

0.0

Correlation Coefficient

Blue Star  Advance Gold

Pay attention - limited upside

The 3 months correlation between Blue and Advance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Advance Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Gold Corp and Blue Star 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 Blue Star Gold are associated (or correlated) with Advance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Gold Corp has no effect on the direction of Blue Star i.e., Blue Star and Advance Gold go up and down completely randomly.

Pair Corralation between Blue Star and Advance Gold

If you would invest  3.25  in Blue Star Gold on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Blue Star Gold or generate 153.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blue Star Gold  vs.  Advance Gold Corp

Blue Star Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Star reported solid returns over the last few months and may actually be approaching a breakup point.

Advance Gold Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Blue Star and Advance Gold

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

The idea behind Blue Star Gold and Advance 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.