Correlation Between Bluestone Resources and Cabral Gold

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

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

Diversification Opportunities for Bluestone Resources and Cabral Gold

0.47

Correlation Coefficient

Bluestone Resources  Cabral Gold

Very weak diversification

The 3 months correlation between Bluestone and Cabral is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bluestone Resources and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and Bluestone Resources 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 Bluestone Resources are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Bluestone Resources i.e., Bluestone Resources and Cabral Gold go up and down completely randomly.

Pair Corralation between Bluestone Resources and Cabral Gold

Assuming the 90 days horizon Bluestone Resources is expected to generate 0.69 times more return on investment than Cabral Gold. However, Bluestone Resources is 1.45 times less risky than Cabral Gold. It trades about 0.03 of its potential returns per unit of risk. Cabral Gold is currently generating about -0.02 per unit of risk. If you would invest  22.00  in Bluestone Resources on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Bluestone Resources or generate 0.0% return on investment over 90 days.

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

Bluestone Resources  vs.  Cabral Gold

Bluestone Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bluestone Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bluestone Resources may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bluestone Resources and Cabral Gold

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

The idea behind Bluestone Resources and Cabral 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.