Correlation Between Blue Star and Antilles Gold

Can any of the company-specific risk be diversified away by investing in both Blue Star and Antilles 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 Antilles 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 Antilles Gold Limited, you can compare the effects of market volatilities on Blue Star and Antilles 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 Antilles Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Antilles Gold.

Diversification Opportunities for Blue Star and Antilles Gold

0.75

Correlation Coefficient

Blue Star  Antilles Gold

Poor diversification

The 3 months correlation between Blue and Antilles is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Antilles Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antilles Gold Limited 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 Antilles Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antilles Gold Limited has no effect on the direction of Blue Star i.e., Blue Star and Antilles Gold go up and down completely randomly.

Pair Corralation between Blue Star and Antilles Gold

Assuming the 90 days horizon Blue Star Gold is expected to under-perform the Antilles Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Blue Star Gold is 2.88 times less risky than Antilles Gold. The otc stock trades about -0.16 of its potential returns per unit of risk. The Antilles Gold Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Antilles Gold Limited on September 4, 2024 and sell it today you would lose (0.72) from holding Antilles Gold Limited or give up 72.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blue Star Gold  vs.  Antilles Gold Limited

Blue Star Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Antilles Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antilles Gold Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak primary indicators, Antilles Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blue Star and Antilles Gold

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

The idea behind Blue Star Gold and Antilles Gold Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.