Correlation Between Bluestone Resources and Dynacor Gold

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

Diversification Opportunities for Bluestone Resources and Dynacor Gold

0.33

Correlation Coefficient

Bluestone Resources  Dynacor Gold

Weak diversification

The 3 months correlation between Bluestone and Dynacor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bluestone Resources and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines 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 Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Bluestone Resources i.e., Bluestone Resources and Dynacor Gold go up and down completely randomly.

Pair Corralation between Bluestone Resources and Dynacor Gold

Assuming the 90 days horizon Bluestone Resources is expected to generate 1.38 times less return on investment than Dynacor Gold. In addition to that, Bluestone Resources is 2.85 times more volatile than Dynacor Gold Mines. It trades about 0.04 of its total potential returns per unit of risk. Dynacor Gold Mines is currently generating about 0.16 per unit of volatility. If you would invest  364.00  in Dynacor Gold Mines on September 4, 2024 and sell it today you would earn a total of  72.00  from holding Dynacor Gold Mines or generate 19.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Bluestone Resources  vs.  Dynacor Gold Mines

Bluestone Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bluestone Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bluestone Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Dynacor Gold Mines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Dynacor Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bluestone Resources and Dynacor Gold

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

The idea behind Bluestone Resources and Dynacor 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.