Correlation Between Bravada Gold and Jindalee Resources

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

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

Diversification Opportunities for Bravada Gold and Jindalee Resources

0.11

Correlation Coefficient

Bravada Gold  Jindalee Resources

Average diversification

The 3 months correlation between Bravada and Jindalee is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bravada Gold and Jindalee Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindalee Resources 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 Jindalee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindalee Resources has no effect on the direction of Bravada Gold i.e., Bravada Gold and Jindalee Resources go up and down completely randomly.

Pair Corralation between Bravada Gold and Jindalee Resources

Assuming the 90 days horizon Bravada Gold is expected to generate 1.41 times more return on investment than Jindalee Resources. However, Bravada Gold is 1.41 times more volatile than Jindalee Resources Limited. It trades about 0.03 of its potential returns per unit of risk. Jindalee Resources Limited is currently generating about -0.03 per unit of risk. If you would invest  4.68  in Bravada Gold on October 10, 2024 and sell it today you would lose (3.42) from holding Bravada Gold or give up 73.08% of portfolio value over 90 days.

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

Bravada Gold  vs.  Jindalee Resources Limited

Bravada Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 3 (%) 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.

Jindalee Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jindalee Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jindalee Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravada Gold and Jindalee Resources

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

The idea behind Bravada Gold and Jindalee 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.