Correlation Between Blue Star and Maple Gold

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

Diversification Opportunities for Blue Star and Maple Gold

0.17

Correlation Coefficient

Blue Star  Maple Gold

Average diversification

The 3 months correlation between Blue and Maple is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Maple Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Gold Mines 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 Maple Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Gold Mines has no effect on the direction of Blue Star i.e., Blue Star and Maple Gold go up and down completely randomly.

Pair Corralation between Blue Star and Maple Gold

Assuming the 90 days horizon Blue Star Gold is expected to generate 1.19 times more return on investment than Maple Gold. However, Blue Star is 1.19 times more volatile than Maple Gold Mines. It trades about 0.24 of its potential returns per unit of risk. Maple Gold Mines is currently generating about 0.06 per unit of risk. If you would invest  2.95  in Blue Star Gold on December 19, 2024 and sell it today you would earn a total of  5.45  from holding Blue Star Gold or generate 184.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Blue Star Gold  vs.  Maple Gold Mines

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 19 (%) 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.

Maple Gold Mines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Gold Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Maple Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Star and Maple Gold

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

The idea behind Blue Star Gold and Maple Gold Mines 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.