Correlation Between Bravada Gold and International Battery

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

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

Diversification Opportunities for Bravada Gold and International Battery

0.04

Correlation Coefficient

Bravada Gold  International Battery

Significant diversification

The 3 months correlation between Bravada and International is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bravada Gold and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery and Bravada Gold 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 Bravada Gold are associated (or correlated) with International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of Bravada Gold i.e., Bravada Gold and International Battery go up and down completely randomly.

Pair Corralation between Bravada Gold and International Battery

Assuming the 90 days horizon Bravada Gold is expected to generate 1.35 times less return on investment than International Battery. But when comparing it to its historical volatility, Bravada Gold is 1.49 times less risky than International Battery. It trades about 0.13 of its potential returns per unit of risk. International Battery Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in International Battery Metals on December 23, 2024 and sell it today you would earn a total of  15.00  from holding International Battery Metals or generate 78.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Bravada Gold  vs.  International Battery Metals

Bravada Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

International Battery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Battery Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravada Gold and International Battery

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

The idea behind Bravada Gold and International Battery Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.