Correlation Between Belysse Group and Merafe Resources

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

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

Diversification Opportunities for Belysse Group and Merafe Resources

-0.19

Correlation Coefficient

Belysse Group  Merafe Resources

Good diversification

The 3 months correlation between Belysse and Merafe is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Belysse Group NV and Merafe Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merafe Resources and Belysse Group 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 Belysse Group NV are associated (or correlated) with Merafe Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merafe Resources has no effect on the direction of Belysse Group i.e., Belysse Group and Merafe Resources go up and down completely randomly.

Pair Corralation between Belysse Group and Merafe Resources

Assuming the 90 days trading horizon Belysse Group NV is expected to generate 0.89 times more return on investment than Merafe Resources. However, Belysse Group NV is 1.12 times less risky than Merafe Resources. It trades about 0.12 of its potential returns per unit of risk. Merafe Resources Limited is currently generating about -0.03 per unit of risk. If you would invest  64.00  in Belysse Group NV on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Belysse Group NV or generate 34.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Belysse Group NV  vs.  Merafe Resources Limited

Belysse Group NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belysse Group NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Belysse Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Merafe Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merafe Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Belysse Group and Merafe Resources

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

The idea behind Belysse Group NV and Merafe Resources 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.